Could My Own Law Firm’s AI Use Put My Case at Risk Without My Knowledge?

“My lawyers filed a brief in my case. Did anyone actually check what’s in it?”

Most founders never ask that question.

They assume that when outside counsel files something with a court, every citation, quotation, and legal proposition has already been verified.

A recent Delaware case provides a strong reason to question that assumption.

In Leiske v. Kidd, Vice Chancellor Lori W. Will of the Delaware Court of Chancery ruled on July 1, 2026 that a brief filed by Richards, Layton & Finger contained AI-hallucinated legal propositions and quotations that did not exist in the cited cases. The court raised an inference under Rule 11, which requires attorneys to verify what they submit to the court. A sanctions ruling remains pending.

For founders, the issue is bigger than one law firm’s internal AI policy.

When outside counsel files something on your company’s behalf, the document carries your company’s name and credibility. If it contains fabricated citations or quotations, the resulting problem can affect your case even if you never knew AI was used to prepare the filing.

What Is an AI Hallucination?

An AI hallucination occurs when an AI system generates information that sounds credible but is false.

In legal work, that might mean creating a citation to a case that does not contain the quoted language or generating a legal proposition that the cited authority never actually supported.

This is particularly dangerous in litigation because legal filings depend heavily on accurate authority.

A citation that looks legitimate can survive an initial review if nobody checks the underlying case.

Opposing counsel, however, may eventually find it.

Your Lawyers’ Filing Still Affects Your Company

You may not personally draft your litigation briefs.

Your outside counsel does that work for you.

But once a document is filed, your company is the party associated with the position.

There are several risks:

• A fabricated citation can undermine your credibility with the court.
• Sanctions exposure can potentially attach to the filing party.
• Opposing counsel may actively examine citations for signs of AI-generated errors.

That makes verification more than an internal law-firm issue.

It becomes part of managing your company’s litigation risk.

This Risk Is Not Limited to Routine Litigation

The Delaware matter involved a fee-advancement dispute connected to board conduct.

That is significant for founders because governance disputes can arise during some of the most sensitive periods in a company’s life, including disagreements involving directors, officers, investors, acquisitions, and corporate control.

These cases can move quickly.

They can also carry substantial financial and reputational consequences.

A credibility problem caused by an inaccurate court filing can therefore affect more than the specific paragraph containing the error. It may influence settlement discussions and the opposing side’s willingness to trust representations made during the dispute.

Law Firms Are Developing AI Policies

The issue does not mean law firms cannot use AI tools.

AI-assisted drafting can potentially improve efficiency.

The critical issue is what happens after AI generates content.

Richards, Layton & Finger’s leadership filed affidavits describing the firm’s internal AI policies after the court demanded information about its AI use.

That raises a practical question for clients:

What verification process does your law firm use before an AI-assisted document is filed?

You should not have to wait for a court to ask before finding out.

Ask About Verification Before High-Stakes Work Begins

Founders routinely ask prospective lawyers about experience, fees, availability, and industry knowledge.

Fewer ask how the firm uses AI.

That is changing.

Before engaging outside counsel for litigation or other high-stakes legal work, it is reasonable to understand:

• Whether attorneys use generative AI in drafting.
• Which types of client information may be entered into AI systems.
• Whether AI-generated citations are independently verified.
• Who performs the final review before a filing is submitted.
• Whether the firm has written policies governing AI use.

These questions can reveal how seriously a firm treats verification and confidentiality.

AI Assistance Does Not Replace Legal Judgment

AI tools can produce drafts quickly.

That does not mean the output is accurate.

A reliable legal workflow therefore requires human review of the final document.

That includes checking citations against the actual cases, confirming quotations, reviewing factual statements, and making sure the legal argument accurately represents the authorities being cited.

The faster an AI tool can generate a document, the more important that verification process becomes.

Common Founder Mistakes

• Assuming outside counsel’s AI use is invisible to you: AI-generated errors can appear in filings submitted under your company’s name, potentially creating credibility and sanctions concerns even when the founder never participated in drafting.
• Never asking about the firm’s AI policy: Understanding whether your lawyers use AI and how they verify its output is a reasonable question before high-stakes legal work begins.
• Treating AI-assisted drafting as automatically reliable: Fast drafting does not eliminate the need to independently verify citations, quotations, facts, and legal arguments before anything reaches a court.

10-Minute Outside Counsel AI Self Check

• Have I asked my outside counsel whether the firm uses generative AI?
• Do I know whether anyone independently verifies citations before filing?
• Is my company involved in litigation, an M&A dispute, or a board conflict where credibility is particularly important?
• Would I know if a court filing contained a fabricated quotation?
• Has counsel explained how AI tools are used when preparing my documents?
• Do I have an opportunity to raise concerns before a filing is submitted?

If you cannot answer yes to all of these, you don’t actually know what’s protecting your case from this exact risk.

Bottom Line

AI hallucinations in legal filings are no longer just a theoretical concern. The issue surfaced in a Delaware Court of Chancery matter involving one of the state’s established corporate law firms, and the court’s sanctions decision remains pending.

Founders do not need to prohibit their lawyers from using AI.

They do need to understand how AI is used, what safeguards are in place, and who verifies the final work.

The goal is simple: your legal team should be using technology to improve its work without allowing an unverified AI output to become your company’s problem.

Do You Know What Your Vendors and Outside Counsel Actually Touch?

Download our free Data Mapping Worksheet to identify where personal information is collected, stored, and transferred throughout your business. Mapping those data flows can help you understand which vendors and service providers have access to sensitive information before you update your privacy documentation.

Get the free worksheet: https://primumlaw.com/data-mapping-worksheet/?post_type=page