Lacey v. State Farm: $31,100 sanctions after AI-generated brief cited nonexistent cases

In Lacey v. State Farm (C.D. Cal.), Special Master Michael Wilner ordered Ellis George and K&L Gates to pay $31,100 jointly after an attorney used AI tools to generate a brief outline that contained roughly nine incorrect citations out of 27, including at least two authorities that do not exist and fabricated quotations. A revised brief filed after the judge flagged two citations still contained about a half-dozen AI errors and did not disclose AI use; the judge struck the briefs and found the conduct tantamount to bad faith.

What this means for youVerify every citation, statistic or quote an AI gives you before it goes into anything official, because you bear the penalty, not the tool.