Insurance claimant loses discovery relief after her lawyers file AI-generated false citations; special master's order sanctions the two firms $31,100
In an order dated 5 May 2025 and filed on 6 May in Lacey v. State Farm (C.D. Cal.), a special master struck the claimant's supplemental briefs and denied the discovery relief she sought after her lawyers filed briefs built on unverified AI-generated legal research: about nine of 27 citations were wrong and at least two cited authorities did not exist. One lawyer's sworn declaration says the outline he circulated relied on generative AI features in CoCounsel, Westlaw Precision and Google Gemini, and that he could not tell whether particular errors came from his transcription or from a tool; co-counsel at the second firm say they used no AI tools and did not know AI had been used. The order makes the two firms jointly pay $31,100, states the client was not at fault and will not bear the awards, and imposes no penalty on individual lawyers.
- AI system
- CoCounsel, Westlaw Precision and Gemini (reported)
- Occurred
- Apr 2025 to May 2025
- Reported
- 6 May 2025
- Event location
- Unknown
- What the AI did
- Informed a human decision about the person
- Reported harm
- Legal Harm
- Whose AI use
- Someone else’s AI use
- Setting
- Justice
- Evidence
- AI involvement supported · Causal attribution supported · 1 source
- 5 claims: 3 documented, 2 reported. 4 open questions
- People reported harmed
- At least 1 person
AI system as recorded: CoCounsel, Westlaw Precision and Google Gemini, named in one lawyer's sworn declaration as the generative AI tools used for the research outline; the order itself refers to 'various AI tools' and does not establish which tool produced each error
What Happened
The sanction. The special master's order (ECF 119, dated 5 May 2025, filed 6 May 2025) records that the claimant's supplemental brief on an insurer's privilege assertions "contained numerous false, inaccurate, and misleading legal citations and quotations": "approximately nine of the 27 legal citations in the ten-page brief were incorrect in some way" and "At least two of the authorities cited do not exist at all." The order states: "I have struck, and decline to consider, any of the supplemental briefs" and "I decline to award any of the discovery relief" the claimant had sought.
How the AI material reached the brief. The order says a lawyer at one firm "used various AI tools to generate an 'outline' for the supplemental brief", sent it to co-counsel at a second firm, who incorporated it; nobody cite-checked it. After the special master queried two citations, the brief was re-submitted without those two but with the remaining AI-generated errors and without disclosing the AI use. The special master found the undisclosed AI use, the failure to cite-check and the re-submission together "demonstrate reckless conduct" and wrote that "Plaintiff's use of AI affirmatively misled me."
What the lawyers said. The originating lawyer's sworn declaration (appendix, PDF pages 46-47) says his preliminary outline "had relied, in part, on the use of generative AI capabilities found in CoCounsel and Westlaw Precision and Google Gemini", and that "It is unclear to me whether there was human error in my transcription of that research, or whether one of the research tools I utilized returned some erroneous information." The second firm's submission (page 76) says "None of the K&L Gates attorneys who worked on the subject brief used any AI tools; had access to any AI tools; or had any awareness" of the AI use until the special master's inquiries, and the order accepts that they did not know.
Money and the client. The firms are ordered jointly and severally to pay $31,100 in aggregate (about $26,100 of special-master fees reimbursed to the defence and $5,000 of defence fees). The order says the client is "clearly not at fault for the AI debacle" but "will bear this outcome as a consequence of her lawyers' actions", and that she "will not, however, be financially responsible for the monetary awards". The special master declined any sanction against individual lawyers.
Limits. A single court record. The order does not establish that the claimant would otherwise have obtained the discovery relief, which tool produced each erroneous citation, or the later course of the insurance case. Page 1 of the PDF (paragraph 1 of the order) yielded no extractable text and was not inspected.
Reported harm
The special master struck the claimant's supplemental briefs and denied the discovery relief she sought after her lawyers filed briefs built on unverified AI-generated citations; the $31,100 award falls on the firms, not on her.
Outcome
Order dated 5 May 2025 (filed 6 May 2025): supplemental briefs struck, no further discovery relief on the disputed privilege issue, the two firms jointly and severally ordered to pay the defence $31,100 in aggregate within 30 days for the fee component, no sanction against individual lawyers. The later course of the insurance action is not recorded here.
What remains unknown
- Which tool, if any, produced each erroneous citation or quotation; the declarant says he cannot distinguish his transcription errors from tool output.
- Whether the requested discovery relief would have been granted had the briefs been accurate.
- The later course of the insurance action and where the AI-assisted drafting took place.
- Paragraph 1 of the order (PDF page 1) was not inspected because the page yielded no extractable text.
What the evidence supports
AI involvement: supported. The filed order records that a lawyer used AI tools to generate the research outline for the claimant's brief and that the resulting brief contained false citations and quotations (about nine of 27 wrong, at least two non-existent). The special master read those authorities, found they did not exist, and on that basis struck the briefs and denied the discovery relief, writing that the use of AI affirmatively misled him. The declarant names CoCounsel, Westlaw Precision and Google Gemini but cannot say which tool produced each error, so the per-tool contribution is unestablished.
5 claims: 3 documented, 2 reported. What the statuses mean
Documented The special master struck the claimant's supplemental briefs and denied the discovery relief she sought because her lawyers filed briefs built on unverified AI-generated legal research.
Causal attribution. The order itself connects the struck briefs and denial of relief to counsel's undisclosed AI use, failure to cite-check and re-submission of the defective brief (paras 17-20).
- lawnext.com(opens in new tab) supports · English
ECF 119 p. 8 para 20: 'I have struck, and decline to'; 'consider, any of the supplemental briefs'; 'I decline to award any of the discovery relief'; p. 7 para 17: 'The initial, undisclosed use of AI products to'; 'generate the first draft of the brief was flat-out wrong.'
Documented The order records that about nine of the 27 citations in the ten-page brief were incorrect and that at least two cited authorities do not exist.
Causal attribution. The special master's own after-the-fact review, as recorded in the order.
- lawnext.com(opens in new tab) supports · English
ECF 119 p. 2 para 5: 'approximately nine of the 27 legal'; 'citations in the ten-page brief were incorrect in some way. At least two of the'; 'authorities cited do not exist at all.'
Documented The order makes the two firms jointly and severally pay $31,100 in aggregate, states the client was not at fault and will not be financially responsible for the awards, and declines any sanction against individual lawyers.
Causal attribution. Allocation of financial responsibility is directly recorded in the order.
- lawnext.com(opens in new tab) supports · English
ECF 119 p. 10 para 24: 'clearly not at fault for the AI debacle'; 'She will not, however, be financially'; para 25: 'I decline to order any sanction'; conclusion: 'aggregate amount of $31,100.'
Reported One lawyer's sworn declaration says the outline he circulated relied in part on generative AI features in CoCounsel, Westlaw Precision and Google Gemini, and that he cannot tell whether particular errors arose from his transcription or from a tool.
Causal attribution. The declarant's own statement; the order does not determine which tool produced each error.
- lawnext.com(opens in new tab) supports · English
ECF 119 appendix, declaration p. 46 para 3: 'generative AI capabilities found in CoCounsel and Westlaw Precision and'; p. 47 para 4: 'It is unclear to me whether'; 'research tools I utilized returned some erroneous information.'
Reported The second firm states that none of its lawyers who worked on the brief used or had access to AI tools or knew that AI had been used until the special master's inquiries.
Causal attribution. The firm's own submission; the order records that the special master had no reason to doubt the sworn statements.
- lawnext.com(opens in new tab) supports · English
ECF 119 appendix, joint response section II p. 76: 'None of the K&L Gates attorneys who worked on the subject brief used any'; order p. 3 para 7: 'the attorneys at K&L Gates didn’t'
Sources
1 source inspected. Sources that repeat one account do not corroborate each other.
- Lacey v. State Farm General Insurance Co., C.D. Cal. 2:24-cv-05205, ECF 119: special master's sanctions order dated 5 May 2025, filed 6 May 2025 (with appendix)(opens in new tab)
s1 · lawnext.com · Court order · English · Inspected · 6 May 2025 · Primary
How the sources were read, and where the events happened
English; read on 2026-10-09 from the retained PDF text of the 77-page filing: order pp. 2-10, appendix inventory p. 11, originating lawyer's declaration pp. 46-47 and the firms' joint response section II p. 76. PDF page 1 yielded no text. Not every appended exhibit was read. Applies to s1.
Event countries: Unknown. Affected-person countries: Unknown. Court countries: United States.
The order was issued by a special master in the US District Court for the Central District of California. The record does not state where the AI-assisted drafting took place or where the claimant lives, so event and affected-person countries are left unknown.
Reviewed for publication 2026-10-09: A filed court order directly establishes that the claimant's briefs were struck and her discovery relief denied because of AI-generated false citations in her lawyers' filings, with the monetary award placed on the firms. The tool identities are attributed to the declarant and kept as reported.
People described
The insurance claimant (plaintiff in a coverage action) whose supplemental briefs were struck and whose requested discovery relief was denied because of her lawyers' AI-generated citations
People reported harmed in this case
At least 1 person
0 AI participants · 1 other person harmed
One claimant whose briefs were struck and whose discovery relief was denied (order paras 20 and 24). She did not use the AI tools herself, so participant users is 0. The lawyers and firms bear the monetary award but are not counted as harmed persons.
Counted once within this case. The same person may appear in other cases. This count does not establish AI causation.
Cite this case
Compiled per our published methodology: verification statuses, sourcing standards, and corrections process.
APA
NOPE. (2026). Insurance claimant loses discovery relief after her lawyers file AI-generated false citations; special master's order sanctions the two firms $31,100. AI incidents. https://nope.net/incidents/2025-lacey-insurance-discovery-relief-denied-ai-citations
BibTeX
@misc{2025_lacey_insurance_discovery_relief_denied_ai_citations,
title = {Insurance claimant loses discovery relief after her lawyers file AI-generated false citations; special master's order sanctions the two firms \$31,100},
author = {NOPE},
year = {2026},
howpublished = {AI incidents},
url = {https://nope.net/incidents/2025-lacey-insurance-discovery-relief-denied-ai-citations}
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