Managing the Risk of AI Hallucinations in Legal Practice

Managing the Risk of AI Hallucinations in Legal Practice

Generative AI is rapidly transforming the legal profession, accelerating research, drafting, and analysis. Yet, according to an article by the Baker Donelson firm, alongside these gains comes a rising threat: AI hallucinations. 

The article highlights that since mid-2023, courts have identified over 120 legal filings tainted by fictitious case law generated by AI tools, including 58 such cases as of 2025. These AI hallucinations, where citations are fabricated or a precedent is invented, are no longer rare mishaps; they represent a growing credibility crisis. Judges across jurisdictions have sanctioned attorneys for submitting briefs containing false citations, thereby undermining trust in the profession and exposing firms to financial and reputational risk.

While AI offers tremendous efficiency gains, it operates on probability, not truth. Its confident tone can obscure fabricated content, leading attorneys to treat its output as fact rather than hypothesis. 

Courts have responded by requiring attorneys to certify that all AI-generated content has been verified. As noted in the article, one firm faced a $31,100 sanction for failing to do so, underscoring the high cost of poor process. These incidents aren’t proof that AI should be banned from legal work. Rather, they reveal a pressing need for better education, stronger prompting protocols, and a culture of verification.

Generative AI is here to stay, but its output must be treated with professional skepticism. Training programs must equip legal teams with tailored prompting strategies, rigorous citation checks, and continuous education as tools evolve. The true liability isn’t AI itself but the failure to supervise it. Law firms that build responsible, defensible workflows today will be best positioned to harness the benefits of AI without falling victim to its risks.