AI Hallucinations in Law

Artificial Intelligence is transforming the legal sector. With vendors like Microsoft continuing to develop an ever expanding and improved suite of advanced AI services and solutions. Law firms can now streamline processes from case management to document collation and compliance verification. 

Used correctly, AI can be a powerful ally, helping legal professionals reduce administrative burdens and focus on higher-value tasks. But it’s crucial to remember that AI is a support tool, not a substitute for human judgment. Misuse or misunderstanding of AI can lead to serious issues, including hallucinations that may compromise legal outcomes. 

What are AI hallucinations and why do they matter?

In simple terms, when AI is not implemented and used correctly hallucinations can occur. An AI hallucination is where AI presents false, misleading or fabricated information as fact. In a legal context, that can naturally be incredibly problematic, with hallucinations arising in several different ways.

• Inaccurate or irrelevant data

If a legal practice allows an AI model to extract information from both the firm’s internal case management system and the wider web, it could end up using unreliable sources. Let’s say you ask it about a case involving Bob and Alice – if a blog has been published online about different individuals with the same names, then the AI might reference this rather than the case you intended.  

• Conflicting or outdated information

Even within a firm’s own systems, multiple versions of documents can confuse AI. Without clear direction, it might use outdated or incomplete files. 

• Vague or poorly structured prompts

Equally, in instances where your AI is leveraging the right datasets, it can still provide wrong, vague or incomplete answers if you don’t define your prompts and questions clearly enough. Let’s say you ask it how Bob and Alice were involved in a car accident – if there are multiple Bobs and Alices involved in the dataset, then the AI may provide information about the wrong individuals. Unless you prompt your AI solution with explicit parameters (or this is done on your behalf), AI could provide the wrong information. 

• Complete fabrication

Without proper guardrails in place AI may invent details entirely. Asking what happened after Alice and Bob’s car accident could result in fictional responses like “they went for a walk in the park.”   

• Safeguarding against AI errors

In a legal context, any of these hallucinations can have severe consequences. It’s essential to mitigate the risks of them arising, or you could begin to see false or incorrect information creeping into cases that may compromise their integrity entirely. 

Several high profile examples of this have already begun to emerge. In an £89 million damages case against the Qatar National Bank earlier this year, 18 out of 45 case-law citations submitted by the claimants were found to be fictious.  

How to prevent AI hallucinations

• Clarify AI’s role: AI is a co-pilot, not a decision-maker. It’s there to assist, not replace, legal professionals. 

• Establish clear AI usage policies: Define which tools are approved and which are off-limits. With 78% of users bringing their own AI tools to work, firms must ensure only vetted, secure platforms are used like Microsoft’s. 

• Use purpose-built legal AI tools: Generic AI models may access external data or mishandle sensitive information. Instead, firms should adopt or develop proprietary tools with an IT solutions partner that draw only from validated, internal sources. 

• Invest in training and education: Equip your team with the knowledge to use AI effectively. This includes prompt engineering and understanding how to verify outputs. Some legal practices are already leading the way in this domain, bringing AI leads on board to educate their workforces on AI, showing them how to mitigate hallucinations through effective prompt engineering. 

Audit, verify, and stay vigilant

AI implementation isn’t a one-time task; it’s an ongoing responsibility. Regular audits at both the system and user level are essential. Legal professionals must fact-check AI outputs, verify sources, and question any information that lacks transparency. 

When used responsibly, AI can accelerate legal workflows, improve analysis, and enhance documentation. But one hallucination or one false statement can derail a case and damage a firm’s reputation. 

At BCN, we have experts experienced at helping legal practices harness AI safely and effectively. Whether you need help developing secure AI tools, training your team, or auditing your systems, our experts are here to guide you.