Lacey v. State Farm General Insurance Co.

Two law firms, one bad outline, and a special master who wrote that he was "affirmatively misled." The judge called it a "collective debacle," and the collectivity is the lesson: the firm that generated the research and the firm that filed it paid together, because receiving counsel never verified what co-counsel handed over. The follow-up brief is the second lesson. After the errors were flagged, the corrected filing still contained about half a dozen of them.

An Ellis George lawyer used Google Gemini and Westlaw's AI features to generate an outline for a supplemental brief on privilege documents. Of its 27 citations, nine were incorrect in some way, at least two authorities did not exist at all, and several quotations were phony. K&L Gates incorporated the outline into the filed brief without verification. Flagged by the Special Master, the firms filed a revised brief that still carried roughly six AI errors, and the bogus material nearly made it into a judicial order.

On the underlying Rule 11 motion, the Special Master found the conduct "tantamount to bad faith." Sanction: $31,100 against Ellis George and K&L Gates jointly and severally ($26,100 in Special Master fees plus $5,000 payable to the defense), the supplemental briefs stricken, and no further discovery relief on the privilege issue. The individual lawyers were not sanctioned, on their full admissions and apologies, but were ordered to inform their client.

"The other firm did the research" is not a defense; whoever files it owns it. And when a court flags errors, re-verify the entire brief, not just the flagged lines. The lingering errors in the revision are what turned sloppiness into a bad-faith finding.

This case is covered in Episode 10: His Co-Counsel Sent an AI Brief. He Filed It Without Reading. (watch on YouTube).

• Primary order: https://www.toplaw.news/litigationworld/d/2025-05-15-LitigationWorld-Order.pdf
• abajournal.com: https://www.abajournal.com/web/article/judge-imposes-sanctions-for-collective-debacle-involving-ai-hallucinations-and-2-law-firms-including-k
• law.com: https://www.law.com/legaltechnews/2025/05/13/a-collective-debacle-ellis-george-and-kl-gates-ordered-to-pay-31000-after-using-ai-to-write-brief-in-insurance-case-/
• abovethelaw.com: https://abovethelaw.com/2025/05/law-firms-use-artificial-intelligence-to-earn-very-real-31k-sanction/