INTRODUCTION
The adoption of artificial intelligence (AI) has immensely influenced the legal profession, as it is set to offer efficiency and better access to the judicial process. Nonetheless, this technological change has also raised some grave ethical and professional issues, such as the issue of AI hallucinations. AI hallucinations are described as the occurrences in which AI systems produce outputs that are either wrong, misleading or completely fabricated, usually with a plausible sense of believability. This is a great challenge since the legal practice is inherently based on accuracy, evidence, and ethical responsibility. The Supreme Court Justice B R Gavai has cautioned that AI should be used as a supplement and not a substitute to the judicial discretion.
BACKGROUND
AI tools are being used by legal professionals all over the world to automate various processes like legal research, pleadings drafting, and legal argument synthesis. The tools are AI-based technologies that make use of machine learning, natural language processing (NLP), and data analytics to process and generate legal content, and thus complete repetitive and time-intensive processes such as reviewing a document and analysing a contract.
In spite of the ways, they could be useful, AI models, and especially Large Language Models (LLMs), work on probabilistic prediction, but not based on legal arguments. Most concerningly, some models have been reported to have large rates of hallucinations during the Q and A tests. Since the AI does not have deductive reasoning and professional judgment to affirm legal arguments, the use of AI without checks and balances may have serious consequences, including incorrect filings and professionalism violations.
KEYPOINTS
The sources point out the following key risks, impacts and professional obligations associated with the AI hallucinations in the courtroom:
- Creation of Fake Legal Authorities: The greatest danger is that AI tools such as ChatGPT can produce false reference cases and counterfeited facts of law. It has resulted in cases when lawyers, who rely on information provided by AI, referred to missing cases or false legal precedents. The point is that AI does not possess the capability to analyze sources on the same level of discernment as humans would do.
- Dismissal and Fines Case: in a high-profile case in the US (2023) Mata v. The lawyers of Avianca, Inc. were fined and sanctioned after they relied on ChatGPT to refer to six non-existent cases, which led to the dismissal of the case of the plaintiff.
- Financial Liability: In Canada counsel has been personally liable in the cost and expense of remediation research of the other side when he wrongly filed a notice alleging fabricated legal authority.
- Lawyers are extremely bound to the responsibility of checking all sources of the law. The rules of professional conduct are also focused on the fact that lawyers have to realize the abilities and constraints of AI tools. Blind use of AI tools is against professionalism. Also, the candor to the tribunal doctrine demands that a lawyer should not lie or misrepresent a fact or law in good faith, and it is crucial that the results of AI application are carefully checked.
RECENT DEVELOPMENT
Global Incidents
- United States: On top of the Mata v. Wadsworth v. sanctions were imposed on Avianca. Walmart Inc. vs. three lawyers on the grounds of referencing eight counterfeit cases that were generated by their artificial intelligence service, MX2.law. A US bankruptcy attorney was fined 5,500 dollars, after filing filings including falsely created case citations that ChatGPT had generated as a result of an assumption provided by the program that it would not create quotes.
- United Kingdom: The High Court of Justice King’s Bench Division made a regulatory decision in which lawyers were encouraged to end the abuse of AI following two cases which were ruined by fake or suspected AI-generated case-law references. There was one 18 out of 45 cases of falsified citations. Dame Victoria Sharp cautioned that the likely responses given by AI could turn out to be completely wrong, referring to non-existent sources.
- Australia: The Federal Circuit and Family Court dismissed submissions made by one of the lawyers who provided the fabricated case authorities, created by ChatGPT. By removing an imaginary reference in a judgment, the Full Court of the Federal Court showed its understanding of the problem by making sure it did not contribute to further spreading of the problem by AI systems.
Developments in India
The judicial leaders and Indian courts have been on the offensive to identify and mitigate the dangers of AI:
- Incidents in the Delhi High Court: A petition was dropped in the Delhi High Court following the complaints by the respondents that all the grounds are false and fabricated and referenced case laws that do not exist. The petition referred to paragraphs which were not there in a judgment (Raj Narain v Indira Nehru Gandhi) which had only 27 paragraphs. The Delhi High Court had previously rebuked a lawyer who provided arguments grounded on artificial precedents produced by an AI tool.
- ITAT Incident: The Bengaluru branch of Income Tax Appellate Tribunal (ITAT) had to withdraw a tax decision after discovering that the decision was made using artificial case laws created with the help of an AI application.
- Judicial Warnings: Supreme court judge Rajesh Bindal warned against the increased abuse of AI search models, as the result of such abuse means that young attorneys present false rulings before the court. He emphasized how it is the duty of the older advocates to mentor and advise the young generation on these risks.
- Regulation and Policy: In July 2025, the Kerala High Court passed the first detailed policy governing AI use in the district courts of India. The policy specifically forbids the application of AI tools (such as ChatGPT and DeepSeek) to reach any findings, reliefs, orders, or judgment and puts emphasis on the fact that AI should not replace judicial reasoning. According to it, all the results of approved tools should be tested by judges or qualified translators, and the use of AI services on the cloud is specifically prohibited to avoid confidentiality leaks.
CONCLUSION
The issue of AI hallucinations in the legal profession compels the professionals to strike the right balance between the prospects of higher efficiency and availability and the necessity to uphold the sanctity of justice. Although AI tools have several advantages, including real-time transcription, automated case translation, and easy document summarization, they also present some new risks of wrong information and ethical breach.
It is very clear that AI should be used as an assistant tool, which is the opinion of the judiciary and legal experts. Lawyers should demonstrate professional judgment, which will hold human-in-the-loop accountable and critically evaluate all outputs of AI. In the future, this issue will be overcome by perpetual education, the creation of explicit ethical standards, and institutional awareness, such as checking the process, introducing AI detection software, and making it mandatory to issue certifications of verifications of court filings. After all, it is up to the legal professionals themselves to ensure the accuracy and exercise ethical practice.
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WRITTEN BY Manisha Kunwar
