$31,000 Sanction in Lacey v. State Farm Tied to Purportedly Undisclosed Use of LLMs and Erroneous Citations

In the case of Lacey v. State Farm in California, attorneys from two law firms (Ellis George and K&L Gates) submitted a supplemental brief to Special Master Judge Michael Wilner that contained AI-generated legal research with numerous false citations and quotations. Attorney Mr. Copeland at Ellis George used various AI tools to generate an 'outline' for the brief containing problematic legal research, which was then incorporated into the final brief by K&L Gates without verification. Of the 27 legal citations in the ten-page brief, approximately nine were incorrect in some way, with at least two cited authorities that do not exist at all. Several quotations attributed to judicial opinions were fabricated and did not accurately represent the materials. When Judge Wilner initially flagged two incorrect citations, the attorneys resubmitted a revised brief that still contained half a dozen AI-generated errors without disclosing the use of AI tools. The judge concluded that the attorneys acted in bad faith through their undisclosed use of AI, failure to cite-check the research, and resubmission of defective materials without proper disclosure. As sanctions, the judge struck the briefs, denied discovery relief, and ordered the law firms to pay $31,100 in compensation to the defense and Special Master fees.