As generative AI tools become integral to legal, regulatory, and professional workflows, the phenomenon of AI hallucination introduces unprecedented legal risks. These risks are not theoretical; they have materialized in courtrooms and policy arenas.
One of the most infamous cases is Mata v. Avianca, where attorneys submitted a legal brief filled with fabricated case citations generated by ChatGPT. When challenged, the attorneys asked the AI to verify its own output, compounding the error. The court imposed fines and disciplinary measures, reinforcing the duty of human oversight.
Other cases across North America, including in California, Utah, and Toronto, have seen similar sanctions. Lawyers filed documents containing hallucinated case law, some citing sources that didn’t exist or misrepresented legal precedents. In some cases, courts ordered financial penalties, mandatory disclosures, and retraining.
AI hallucinations have also disrupted public policy. The White House's "MAHA Report," overseen by Robert F. Kennedy Jr., included fabricated scientific citations likely generated by AI. The report suffered public condemnation, and federal officials had to quietly revise it.
These incidents highlight severe governance failures:
Legal practitioners must treat AI hallucinations not as anomalies, but as known risks requiring proactive governance. Failing to do so may result in malpractice, sanctions, and loss of public trust.