In a recent legal dispute between Pursuit Credit Special Opportunity Fund, L.P. (“Pursuit”) and KrunchCash LLC, along with its associated entities and Jeffrey Hackman (collectively, “Defendants”), an unusual yet increasingly pertinent issue has surfaced: the reliance on artificial intelligence (AI) in preparing legal documents. This scenario provides a stark illustration of the potential pitfalls of integrating AI technology into legal practices without sufficient oversight and rigor.
The case, as documented in submissions to the New York Supreme Court, reveals that the Defendants’ legal team apparently used AI to draft their opposition to Pursuit’s motion for summary judgment. This has raised significant concerns about the accuracy and reliability of AI-generated legal content, leading to a request from Pursuit to strike the Defendants’ response from the record.
The Flaws Exposed
The documents submitted by the Defendants exhibit several critical errors that suggest AI involvement:
1. **Mismatched Responses and Statements**: The Defendants responded to paragraphs that did not exist in Pursuit’s original statement of material facts and misquoted or hallucinated statements purportedly from Pursuit’s submissions.
2. **Incoherent Argumentation**: There were instances where the roles of the plaintiff and defendants were confused, and the responses were often not aligned with the corresponding statements from Pursuit.
3. **Non-existent Evidence**: The Defendants cited evidence that simply did not exist, undermining the credibility of their legal arguments.
These errors not only compromise the integrity of the legal process but also potentially damage the Defendants’ position in the litigation. Such inaccuracies and hallucinations in legal documents can mislead the court and opposing parties, leading to unjust outcomes.
In another case matter (Ader v. Ader, 2025 NY Slip Op. 51563(U) (Sup. Ct. N.Y. Cty. Oct. 1, 2025)) heard by the same Judge, counsel’s misuse of artificial intelligence to include case citations clearly not reviewed by counsel. In that matter, Justice Cohen issued sanctions against Defense counsel for inappropriately using AI and and directed that his decision be sent to the New Jersey office of Attorney Ethics.
| Pamela B. Ader, as executor of the estate of Richard H. Ader, Plaintiff, against Jason Ader, JS Property Holdings LLC, Defendants. Decided on October 1, 2025, Supreme Court, New York County |
Justice Cohen’s October 1, 2025 Order for Sanctions Against Counsel
“The Court may award sanctions for frivolous conduct against a party and/or an attorney in its discretion where appropriate (22 NYCRR § 130-1.1). Moreover, Rule 3.3 of the New York Rules of Professional Conduct (“Conduct Before a Tribunal”) provides that a lawyer “shall not knowingly make a false statement of fact or law to a tribunal[.]” (NY ST RPC Rule 3.3). Finally, 22 NYCRR § 100.3(D)(2) provides that “[a] judge who receives information indicating a substantial likelihood that a lawyer has committed a substantial violation of the Rules of Professional Conduct (22 NYCRR Part 1200) shall take appropriate action.”
“Use of AI is not the problem per se. The problem arises when attorneys abdicate their responsibility to ensure their factual and legal representations to the Court—even if originally sourced from AI—are accurate. “The court relies on attorneys to do their jobs: advocate for their clients using law and facts—real law and real facts” (Enterprise v Shvo, NYSCEF 154 in Index No. 653221/2024 [Sup Ct, NY County, Dec. 24, 2024] [Masley, J.]). When attorneys fail to check their work—whether AI-generated or not—they prejudice their clients and do a disservice to the Court and the profession. In sum, counsel’s duty of candor to the Court cannot be delegated to a software program.”
“By now the risks and consequences of AI-hallucinated citations should be familiar (see e.g. Park v Kim, 91 F 4th 610, 615-16 [2d Cir 2024] [attorney referred to court’s grievance panel for disciplinary proceedings for submitting brief containing non-existent case citations generated by ChatGPT and case was dismissed]; Mata v Avianca, Inc., 678 F Supp 3d 443, 466 [SD NY 2023] [attorneys ordered to pay a penalty and to send copies of sanctions petition to client and each judge falsely identified as authors of fake opinions]; Enterprise v Shvo, supra [ordering attorney to reimburse movants for fees incurred in communications regarding improper AI use]; Matter of Samuel, 82 Misc 3d 616, 620 [Surr Ct, Kings County 2024] [affirmation brief struck from the record]). Moreover, courts have made clear that reliance on the research of others is not a valid excuse for presenting false citations (Johnson, 2025 WL 2086116, at *20 (citing cases)).”
“Here, Plaintiff seeks her attorney’s fees and costs and out-of-pocket expenses incurred by the delay in adjudicating her summary judgment motion as a sanction against Defendants for frivolous conduct. The Court finds that awarding Plaintiff her reasonable costs and attorney’s fees incurred in connection with the sanctions motion, together with such fees attributable to addressing Defendants’ unvetted AI citations and quotations in the summary judgment motion, is an appropriate monetary sanction against both Defendants and their counsel, jointly and severally.”
“In addition, in view of the reporting mandate of 22 NYCRR § 100.3(D)(2) and to deter such conduct going forward (see Johnson, 2025 WL 2086116, at *20), the Court directs Plaintiff’s counsel to submit a copy of this decision and order to the Grievance Committee for the Appellate Division, First Department and the New Jersey Office of Attorney Ethics, copying Defendants’ counsel and this Court on its transmittal letters. The Court will provide a copy of this decision and order to Judge Katz, who is presiding over a matrimonial matter in this Court in which Defendants’ counsel is representing Jason Ader (NYSCEF 169 at 23).”
“Therefore, it is”
“ORDERED that Plaintiff’s motion for sanctions pursuant to 22 NYCRR § 130-1.1 is GRANTED, such that Defendants and their counsel are jointly and severally liable to compensate Plaintiff for her reasonable costs and attorney’s fees incurred in connection with this [*4]motion, together with fees and costs attributable to addressing Defendants’ unvetted AI citations and quotations in the summary judgment motion; it is further”
“ORDERED that Plaintiff shall submit an application with supporting documentation for the fees awarded above within fourteen (14) days of the date of this order; Defendants and their counsel may submit opposition thereto within fourteen (14) days of Plaintiff’s application. Plaintiff shall notify the Court via letter filing on NYSCEF and by email when the application is complete and whether it is opposed or unopposed; and it is further”
“ORDERED that Plaintiff’s counsel promptly submit a copy of this decision and order to the Grievance Committee for the Appellate Division, First Department and the New Jersey Office of Attorney Ethics, copying defense counsel and this Court on its transmittal letters.”
“This constitutes the decision and order of the Court.”
DATE 10/1/2025
JOEL M. COHEN, J.S.C.
AI in Legal Work: A Double-Edged Sword
The integration of AI into legal work offers promising benefits, such as increased efficiency and the ability to analyze large volumes of data quickly. However, the case at hand underscores the technology’s current limitations and risks. AI, particularly in its current form, lacks the nuanced understanding of legal principles and the strategic thinking required for legal argumentation. It can process and generate text based on patterns in data, but it does not comprehend context or the subtleties of legal reasoning.
Moreover, the use of AI can lead to a detachment of lawyers from their work. Relying on AI without thorough verification and oversight can result in errors going unnoticed until they potentially cause significant legal repercussions. This detachment not only diminishes the quality of legal practice but could also erode trust in legal proceedings.
Ethical and Procedural Implications
The situation also highlights the ethical considerations surrounding the use of AI in legal contexts. Lawyers are traditionally held to high standards of accuracy and diligence under legal and ethical frameworks. Delegating critical tasks to AI without adequate checks does not absolve lawyers from their responsibility to ensure the accuracy and appropriateness of their filings.
From a procedural standpoint, this case may prompt legal institutions to establish clearer guidelines and standards for AI use in legal processes. Ensuring that AI tools are used responsibly and do not undermine the fairness of legal proceedings is paramount.
Moving Forward: Caution and Regulation
As AI continues to evolve and integrate into various sectors, including law, it is crucial that this integration is approached with caution and guided by stringent standards. Legal professionals should be trained not only to use AI tools effectively but also to understand their limitations and risks. Regular audits and checks should be a mandatory part of using AI-generated content in legal filings to prevent errors and maintain the integrity of legal documents.
Ultimately, while AI represents a revolutionary tool in many fields, its use in law must be carefully managed to avoid compromising the quality and fairness of legal proceedings. The case of Pursuit vs. KrunchCash serves as a critical reminder of the need for balance between innovation and the traditional diligence required in the legal profession.