The hidden risks of relying on generative AI to make decisions about your legal matter
Artificial intelligence has become an accessible tool for finding information, preparing documents and analysing complex issues. Generative AI may help with preliminary research or general drafting. Relying on it to make decisions about a legal dispute, however, can expose you to significant and often hidden risks.
Key takeaways
- Generative AI can produce legal material that reads as authoritative but is wrong, including cases that do not exist, invented quotations and misstated legislation.
- A correct statement of law is not the same as advice on your matter. Jurisdiction, procedure, evidence, exceptions and deadlines all change the answer.
- Acting on AI-generated material, such as sending correspondence or rejecting a settlement offer, can damage your position in ways that are difficult to undo.
- Using AI on your own does not necessarily reduce legal costs. Correcting AI-generated work can increase them.
- Entering confidential or privileged information into a public AI platform can create confidentiality, privacy and privilege concerns.
Can AI give you reliable legal information?
A principal difficulty with generative AI is that its answers may appear authoritative even when they are inaccurate. AI systems can “hallucinate” information. They refer to cases that do not exist, invent quotations, misstate legislation and attribute legal principles to the wrong authorities.
These errors are not always obvious. An answer may be expressed fluently, use familiar legal terminology and include apparently credible citations. Unless each proposition and authority is independently verified, the material may provide a false foundation for important decisions.
Courts in several jurisdictions have already dealt with documents containing fictitious authorities generated by AI, with serious consequences for the parties and practitioners involved.
Why a correct legal principle may not answer your question
Even where an AI-generated statement of law is technically correct, it may not apply to your circumstances. Legal advice requires more than identifying general principles. It involves:
- Determining the relevant jurisdiction.
- Considering procedural requirements.
- Analysing what evidence is admissible.
- Identifying exceptions.
- Assessing how courts have applied the law to comparable facts.
Without foundational legal knowledge or practical experience, it is difficult to recognise what an AI system has overlooked. A legally significant fact may have been left out of the prompt. A limitation period, contractual notice requirement, evidentiary issue or adverse costs risk may remain unidentified. The result is a decision made on incomplete or incorrect assumptions.
This is especially dangerous where you act on AI-generated material by:
- sending correspondence to the other side
- making admissions
- rejecting a settlement proposal
- commencing proceedings
- allowing a deadline to expire.
Does using AI reduce your legal costs?
Using AI on your own does not necessarily reduce legal costs. In some cases, it increases them.
If you engage a solicitor after relying on AI, the solicitor must assess the underlying legal matter and also the AI-generated work and any steps already taken. That may require:
| Task | Why it adds cost |
| Verifying cited authorities | Each case and section must be checked against the source |
| Correcting inaccurate propositions | Errors must be identified and explained before the matter can progress |
| Reviewing correspondence already sent | Admissions or positions taken may need to be managed or withdrawn |
| Managing procedural or strategic consequences | Missed steps or poor positioning can take time to repair |
The cost is highest where incorrect material has influenced the conduct of the dispute, or must be separated from otherwise relevant evidence and instructions.
Is it safe to enter your matter into a public AI platform?
You should exercise caution before entering confidential, privileged or commercially sensitive information into a public AI platform. Depending on the platform’s terms and data-handling practices, doing so may create confidentiality, privacy and privilege concerns.
How does & Legal use AI?
We may use sophisticated legal technology and AI-assisted systems as part of our practice. Those tools operate within a professional framework that includes appropriate safeguards, authoritative legal sources, confidentiality controls and review by experienced solicitors. AI supports legal analysis and professional judgment. It does not replace them.
The critical distinction is not whether AI is used. It is who uses it, for what purpose, and whether its output is independently verified by a suitably qualified professional.
Working with & Legal
You are generally better served by instructing a lawyer at the outset. Early involvement allows the issues to be identified correctly, relevant evidence to be preserved, and strategic decisions to be made with an informed understanding of the legal and commercial risks.
Our dispute resolution and litigation team acts in commercial, property and estate disputes, from negotiation through to court. If you have already taken steps based on AI-generated material, contact us before you take any further action.
Call us on (02) 9328 2944 or send us your enquiry.
Frequently asked questions
Can I use AI to draft a letter to the other side in a dispute?
It is not recommended. A letter can contain admissions, take positions or miss deadlines that affect the outcome of your matter. Any correspondence in a dispute should be reviewed by a professional before it is sent.
Can I use AI to prepare documents for court?
NSW courts and the NSW Civil and Administrative Tribunal have issued practice notes and directions that limit how generative AI may be used in documents prepared for proceedings, including affidavits and witness statements. Take advice before using AI to prepare anything you intend to file.
If the AI answer cites a real case, can I rely on it?
No. A case can exist and still be cited for a principle it does not support, or be distinguishable on its facts. Each authority must be read and checked against the source.
I have already acted on AI advice. What should I do?
Stop and take legal advice before taking any further step. We highly recommend you review the Dispute resolution without going to court article on our website for the options available before proceedings begin.
Does & Legal use AI?
We may use legal technology and AI-assisted systems. Their output is reviewed by experienced solicitors, and client information is protected by confidentiality controls.
This article provides general information only and does not constitute legal advice. You should seek advice specific to your circumstances before acting on any information in this article.