Extract from Michael Gennaro’s article “AI Hallucinations Sparking Daunting Malpractice Risks for Legal Departments”
Artificial intelligence adoption is escalating malpractice risk for legal departments—and it’s happening at a time they’re already under pressure to do more with less.
In a recent paper, Jenny Hamilton, chief legal officer of Exterro, an AI-powered platform for privacy, compliance and cybersecurity, said AI-generated legal errors are fundamentally different from traditional malpractice risks facing in-house counsel—and far more dangerous.
While in-house attorneys have historically faced lower sanctions and malpractice exposure compared to their law firm counterparts, Hamilton’s research reveals that AI hallucinations create direct organizational liability that can’t be resolved simply by terminating the attorney who used the flawed tool.
“When courts sanction lawyers for AI hallucinations, they hold counsel responsible regardless of which department selected the tool or how sophisticated the vendor’s claims were,” Hamilton wrote.
