AI Hallucination Reaches the Third Circuit
We previously commented on the scourge of non-existent legal decisions hallucinated by generative artificial intelligence databases finding their way into lawyers’ case filings. Our earlier piece discussed a Pennsylvania Superior Court decision dealing with the problem. Recently, this AI hallucination issue arrived at the doorstep of the U.S. Court of Appeals for the Third Circuit. In a precedential decision, a panel of three judges reprimanded and sharply criticized a lawyer for failing to check the accuracy of what turned out to be AI hallucinations in his appellate brief.
In McCarthy v. United States Drug Enforcement Administration, the Drug Enforcement Administration (DEA) informed a physician assistant that it intended to take away his certification to prescribe drugs. That was because he was prescribing without the required supervision and agreement of a physician. An administrative law judge ruled against the assistant. The DEA Administrator agreed and ordered revocation.
The physician assistant petitioned the Third Circuit for review. The court ordered briefing. The assistant’s lawyer filed an opening brief that included summaries of eight DEA adjudications that the lawyer got from his client. But the lawyer did not verify their accuracy. It turned out that seven cases were misrepresented and the other did not exist. The DEA called this out in its brief. The assistant’s lawyer suspected his client had used AI but still did not check the summaries and waved away the DEA’s critique in his reply brief. All this naturally helped pave the way for a three-judge panel of the Third Circuit to rule against the assistant.
That was the end of the matter for the physician assistant, but not his lawyer. The panel called him on the carpet, ordering him to explain why he should not be sanctioned. It was only then that the lawyer finally checked the summaries and found out they were AI hallucinations. He confessed that he failed to check what his client gave him, despite his suspicions, and blindly used what turned out to be misinformation.
The Third Circuit panel sanctioned the lawyer by reprimanding him in a precedential decision.
In reaching that result, the court considered if the lawyer violated two professional duties: his duty of candor to the court; and his duty to provide competent client representation.
The duty of candor prohibits a lawyer from knowingly making false statements to a court and failing to correct false statements once discovered. While the lawyer might have violated this duty, the panel ultimately found this debatable. It was not sure the lawyer “knowingly” made false statements in his briefs, as he did not check what his client sent him.
The story was different as for the duty to provide competent representation. That obligation requires a lawyer to have all the legal knowledge, skill, thoroughness and preparation a case needs. The lawyer was not “thorough” because he was obliged but failed — to check all the citations in his briefs before signing and filing. This was all the more so because the authorities came from a non-lawyer. Thus, the court found the lawyer violated the duty of competence.
In short, the court declined to say the lawyer lied to the court, but found he was not competent in serving his client. (Ouch!)
Having found a violation, the next question was the sanction to impose. The court could have imposed any penalty short of suspension or disbarment (which can be imposed only by the court’s disciplinary committee).
On one hand, the attorney “wasted” the court’s time. Time and again, he failed to verify his authorities; his work reflected a “complete lack of legal research.” The frustrated panel addressed the lawyer like a parent addressing a misbehaving child:
Attorney has harmed his credibility with this Court. As Attorney signed his brief and submitted it as an officer of the Court, this Court initially credited Attorney with earnest, but mistaken, efforts in offering legal authority to this Court. It was highly disappointing to learn that Attorney’s status as an officer of the Court did not prevent him from blindly submitting erroneous authority and to learn that this Court’s confidence in him was misplaced.
(Double ouch!)
On the other hand, the court found the lawyer’s misconduct mitigated by his display of “sincere contrition” and promise to take steps to ensure this would not happen again. The panel also acknowledged that the attorney arguably lacked notice for how the court would address his conduct, as it had not yet addressed the “appropriate guardrails” for attorney use of AI.
The court ultimately found the latter factor — the lack of prior Third Circuit guidance — dispositive on the sanction to impose. It chose to reprimand the lawyer. The panel probably would have imposed a monetary penalty if this had not been the first Third Circuit case addressing the issue. The court warned future offenders that they could not rely on a lack of guidance and thus may face more severe sanctions than the lawyer in McCarthy.
The panel also was quick to note that it was not criticizing the reliance on others for research or the use of AI. Both can be helpful “with proper supervision and vetting.” And the court acknowledged that perfection was not required to avoid sanctions and “mistakes do happen.”
Judge Cindy Chung authored the panel’s decision and was joined by Judge Peter Phipps. The third panel member, Judge Jane Roth, disagreed. She was less willing to excuse the lawyer’s conduct and would have imposed harsher sanctions. To Judge Roth, the attorney should have checked the summaries much earlier, but chose to “sit on his hands.” She rejected allowing lawyers to “stick their heads in the sand and pray that ignorance” will save them.
The Third Circuit’s McCarthy decision is yet another cautionary tale showing the risk of unverified use of generative AI in legal filings. It is downright mind-boggling to see so many lawyers continuing to blindly trust AI output. Courts are losing patience. Lawyers will suffer fates worse than reprimands and fines. Suspensions and even disbarment may be in the cards.
We said it before, but will say it again, and louder this time, for the people in the back: Always — always! — verify the accuracy of AI-generated legal authority. Failure to do so almost certainly will result in sanctions and embarrassment. As McCarthy shows, even if the court does not order payment, it could announce to the world in a precedential decision that the offending lawyer lacks credibility or competence. No lawyer wants that kind of perpetual stigma.
