Sullivan & Cromwell admits AI errors in a US bankruptcy filing

In short: Sullivan & Cromwell told a US bankruptcy judge that an AI tool helped produce mistakes in a court filing, including wrong quotes and incorrect case citations.

What happened

Sullivan & Cromwell, a major US law firm, admitted that a filing it made in a New York federal bankruptcy court contained multiple AI “hallucinations”. In this context, a “hallucination” means the software confidently makes something up, like a calculator showing an answer that looks real but is wrong.

Andrew Dietderich, who leads the firm’s restructuring practice, apologised to Judge Martin Glenn in a letter. He said the April 9 filing included errors such as misquoting the US Bankruptcy Code and incorrectly citing past court decisions.

The case involves liquidators appointed in the British Virgin Islands who are pursuing actions related to Prince Group and its owner Chen Zhi. Another law firm, Boies Schiller Flexner, which represents Prince and Zhi, flagged the problems. It said some quoted words did not appear in the law cited, and that one “case” referenced was not actually a case.

Sullivan & Cromwell said its internal policies for using AI were not followed when the document was prepared. The firm told the court it instructs lawyers to “trust nothing and verify everything,” and said failing to check AI output violates firm policy.

Why it matters

Court filings need to be accurate because judges and other lawyers rely on them. This incident is another example of how AI can save time but still requires careful human checking, especially in high-stakes situations where small errors can slow cases down and raise costs.

Source: Financial Times