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Bankruptcy Court Provides a Clear Benchmark on the Uses and Limits of Leveraging AI
In a decision of first impression, the U.S. Bankruptcy Court for the Northern District of Illinois (the court) imposed sanctions on a debtor’s counsel and his law firm for filing a brief that included fabricated citations to case law and nonexistent quotations that were generated by artificial intelligence (AI). In issuing its opinion, the court provides practitioners a clear benchmark on the uses and limits of leveraging artificial intelligence in legal filings.
Relevant Background
In September 2024, the debtor, Marla Martin (the debtor), arrived before the court for what was her eighth Chapter 13 bankruptcy case (the 2024 case). In the 2024 case, the debtor’s primary liabilities were unpaid real estate taxes owed on her home, leading to a tax lien acquired by Corona Investments, LLC (Corona). In an attempt to deal with Corona’s secured claim, the debtor prepared multiple Chapter 13 plans that proposed various levels of monthly payments to Corona. Unfortunately for the debtor, the key defect with these plans, as pointed out in objections lodged by Corona (and by the court itself), was that the plans proposed to pay Corona monthly payments that exceeded the debtor’s alleged monthly disposable income, at least according to the debtor’s schedules (which were filed under oath). In response to Corona’s objections, the debtor and its counsel argued, among other things, that Corona lacked standing to object.
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