The Potential Benefits and Risks of ChatGPT in Legal Practice

Artificial intelligence is transforming the practice of law — for better and for worse. The technology has the ability to enhance productivity and streamline processes by eliminating many mundane tasks. However, its use also creates significant risk.

Perhaps the best-known AI tool is ChatGPT. Developed by OpenAI, ChatGPT is a large language model that uses machine learning algorithms to generate humanlike responses to natural language prompts.

Large language models work by statistically predicting what the next word in a sentence should be. ChatGPT was fed huge volumes of data and then trained using reinforcement learning from human feedback (RLHF). That enabled it to fine-tune its predictions and construct coherent sentences. Human interaction has enabled ChatGPT to understand a user’s intent and formulate helpful, natural-sounding responses.

But ChatGPT has no way of knowing if the response is right or wrong. It was trained using information from the internet, some of which could be wildly inaccurate. It may also have “hallucinations” in which it generates false or nonsensical output. Lawyers who take advantage of ChatGPT need to understand these and other risks.

Uses in Legal Practice

ChatGPT has several applications in the practice of law. One of its most helpful uses is transcribing audio and video. ChatGPT uses natural language processing to analyze and understand audio and video inputs. For example, it can take an attorney’s recorded notes and quickly generate a transcript and summary.

Responding to emails is another compelling use case. An attorney can paste an email into the ChatGPT prompt and request a summary and response.

More advanced uses include legal research and writing. ChatGPT can analyze and summarize documents, including deposition transcripts and discovery files, and it can locate relevant legal briefs and case law that were available on the internet when it was trained. It can also generate legal documents such as nondisclosure agreements, demand letters, and even briefs. This is where some lawyers have gotten into trouble.

Fake Cases Garner Sanctions

On June 22, 2023, New York District Court Judge Kevin Castel sanctioned attorneys Peter LoDuca, Steven A. Schwartz, and the law firm of Levidow, Levidow & Oberman P.C. for citing cases invented by ChatGPT. The lawyers asked ChatGPT to find case law relevant to their arguments and the tool simply made them up. The lawyers then cited the fabricated opinions in court filings. Worse, the lawyers did not respond immediately when opposing counsel questioned the citations. They waited until two months later when the court issued an Order to Show Cause why they should not be sanctioned.

In their response, the attorneys admitted that they had only reviewed ChatGPT’s output for grammatical errors and flow. They later asked ChatGPT if the cases existed, and the software insisted that they did.

Judge Castel was unequivocal in his criticism, citing the “many harms” caused by the attorneys’ actions:

The opposing party wastes time and money in exposing the deception. The court’s time is taken from other important endeavors. The client may be deprived of arguments based on authentic judicial precedents. There is potential harm to the reputation of judges and courts whose names are falsely invoked as authors of the bogus opinions and to the reputation of a party attributed with fictional conduct. It promotes cynicism about the legal profession and the American judicial system. And a future litigant may be tempted to defy a judicial ruling by disingenuously claiming doubt about its authenticity.

He fined each attorney $5,000 and directed them to notify their client and any judges identified in the fabricated cases.

Violations of Procedural, Ethical Rules

Judge Castel sanctioned the lawyers and firm pursuant to Rule 11 of the Federal Rules of Civil Procedure. Rule 11(b) requires that “the claims, defenses, and other legal contentions” presented in any document filed with the court are “warranted by existing law or nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law.” Rule 11(c) gives the court the authority to impose sanctions on any attorney or law firm that violates Rule 11(b).

The lawyers also violated multiple ethical rules. ABA Model Rule 1.1 requires that a lawyer “provide competent representation” involving “legal knowledge, skill, thoroughness, and preparation.” Rule 1.3 requires that a lawyer “act with reasonable diligence” in representing a client. Additionally, Rule 5.1 requires each partner in a law firm and lawyers with “comparable managerial authority” to “make reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that all lawyers in the firm conform to the Rules of Professional Conduct.”

Understanding ChatGPT Risks

When a generative AI tool has a hallucination, it invents false information based on nonexistent patterns that the tool perceives as correct. As the technology continues to advance, hallucinations will become less common — and also harder to detect. Lawyers may also succumb to automation bias and accept the output without confirming its quality and accuracy.

The use of generative AI tools such as ChatGPT can also expose confidential client data. Most firms use ChatGPT as a cloud-based service, and the information could be fed back into the large language model for future training. Similarly, sharing sensitive information about third parties could violate state or international privacy laws.

ChatGPT offers many benefits to lawyers, enabling them to use their time more effectively to better represent clients. However, lawyers need to understand the risks of the technology and their obligations within the context of the rules of professional conduct. 

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