To reduce your AI risk, it’s time to consider the AI use of others in your sphere

Issue 19

In a timely follow-up to last week’s issue about Kohls et al. v. Ellison et al., this week we’re considering another case that demonstrates that improper use of AI by the those you work with can impact your clients’ cases and your reputation, and potentially implicate your responsibilities pursuant to Federal Rule of Civil Procedure 11. Earlier this week, in Wadsworth et al. v. Walmart Inc. et al., No. 2:23-cv-00118 (D. Wyo. filed Jul. 6, 2023), the Hon. Kelly H. Rankin issued an order on sanctions and other disciplinary action, which sanctioned three lawyers whose signatures appeared on motions in limine containing eight hallucinated cases.[i]

The Hallucinated Cases 

In January 2025, plaintiffs filed their motions in limine.[ii] On February 6, 2025, the Hon. Kelly H. Rankin issued an order to show cause why plaintiffs’ attorneys should not be sanctioned or other disciplinary action should not issue, because only one of the nine cases cited by plaintiffs in their motions in limine existed.[iii] The order directed at least one of the three attorneys who signed the motions in limine to provide a true and accurate copy of all the cases the court believed to be nonexistent, and if none were able to do so, ordered each of the three attorneys to separately show cause in writing why they should not be sanctioned.[iv] The Hon. Kelly H. Rankin further ordered that the written submission(s) take the form of sworn declaration(s), thoroughly explaining how the fake cases and motion were generated, and detailing each attorneys role in drafting or supervising the motion.[v]  

The Attorney Responses 

On February 13, 2025, the attorneys responded. The declarations reported a consistent story: that the motions in limine were drafted with the assistance of AI by one of the attorneys, and the motions were not reviewed by either of the other attorneys before filing. Below are more details that you can use to evaluate how you might reduce AI risk in your own organization:  

Declaration of T. Michael Morgan 

T. Michael Morgan’s declaration clarified the roles of each lawyer: 

Mr. Morgan is the head of the Products Liability practice group at his firm, and was trial counsel, responsible for strategy and presenting evidence at trial.[vi] Mr. Morgan’s colleague Rudwin Ayala was lead counsel who was responsible for overseeing the case up to trial, including researching, drafting, and filing pleadings and motions.[vii] Taly Goody was local counsel in Wyoming, involved to sponsor pro hac vice admissions and advise on local rules.[viii] 

Mr. Morgan confirmed that Mr. Ayala, who was an experienced litigator who had been practicing law for 15 years, was the one to draft the motions in limine.[ix] Mr. Morgan further stated that neither he nor Ms. Goody were provided with the motions in limine prior to filing.[x] Further, Mr. Morgan stated that after learning about the court’s show cause order, Mr. Ayala indicated he misunderstood the capabilities of the firm’s internal AI tool and believed it to be reliable for researching and drafting briefs.[xi] Mr. Morgan additionally outlined the steps he took in conjunction with his firm to mitigate the impact of the motions in limine and to reduce the risk of a similar occurrence in the future, which included adding a click box to their AI tool that requires a user to acknowledge the limitations of AI and the obligations of attorneys when using AI.[xii]  

Mr. Morgan’s declaration included several exhibits, including a declaration from Yathavapilas Ithayakumar, the firm’s leader of technology, addressed below.  

Declaration of Rudwin Ayala 

In his declaration, Mr. Ayala took full responsibility for preparation of the motions in limine.[xiii] Mr. Ayala shared the prompts he used with the firm’s internal AI tool, and further stated that it was the first time in his career he’d used AI for queries of that nature.[xiv] Mr. Ayala further stated that he was aware the firm had provided training and instructions for the AI tool, but he did not recall any specifics of the training/instructions.[xv]  

Declaration of Taly Goody 

In her declaration, Ms. Goody stated that she did not participate in the preparation of the motion in limine, and was not sent a copy or contacted by her co-counsel about the motion before its filing.[xvi] Further, Ms. Goody stated that she did not have knowledge or access to her co-counsel’s AI tool, and that while she was aware that AI has the ability to hallucinate, she does not personally use AI in her practice.[xvii]  

More Details from Declaration of Yathavapilas Ithayakumar 

Mr. Ithayakumar’s declaration provided more details about the firm’s AI tool, called MX2.law, which was customized to meet the firm’s privacy and security requirements, including HIPAA compliance. The tool was launched within the firm on November 15, 2024, in conjunction with communications to users that hallucinations can occur, and that AI-generated content must be reviewed by attorneys.[xviii] The firm offered training, including a firm-wide webinar for all attorneys, documentation on the system and best practices for use, optional small-group training sessions, and ongoing support.[xix]  

While the declarations described above provide some insight into how the brief with hallucinations was prepared and filed, there are still some unknowns, including whether the firm required all attorneys to attend the firm-wide training webinar on their internal AI tool, and if so, whether Mr. Ayala actually attended the training. 

The Sanctions 

The Hon. Kelly H. Rankin found that the attorneys violated their obligations under Federal Rule of Civil Procedure 11(b) (“Rule 11(b)”), and that sanctions were warranted, although the court additionally noted that it was imposing sanctions that were the least severe punishment to deter future misconduct.[xx] Mr. Ayala received the highest sanction, which consisted of revocation of his pro hac vice status and a $3,000 fine, a number the court reached by considering: 

(1) the number of hallucinated cases in the filing compared to real cases; (2) Mr. Ayala’s apparent access to legal research resources; and (3) the fact that attorneys have been on notice of generative AI’s issues in hallucinating cases for quite some time. A mitigating fact warranting a less severe punishment is Mr. Ayala’s honesty and candor.[xxi] 

Mr. Morgan and Ms. Goody were each fined $1,000.[xxii] The order pointed out that Mr. Morgan and Ms. Goody did not contend that Mr. Ayala signed their names without permission, and that even if they never gave Mr. Ayala permission to sign their names, they were aware of his practice of appending their signatures to filings, which constituted a violation of Rule 11(b).[xxiii] The Hon. Kelly H. Rankin wrote, 

The key takeaway for attorneys is simple: make a reasonable inquiry into the law before signing (or giving another permission to sign a document), as required by Rule 11. If an attorney does not do so, then they should not sign the document. However, if the attorney decides to risk not making reasonable inquiry into the existing law and signs, then they may be subject to sanctions.[xxiv] 

The Takeaways 

Every attorney has an obligation to satisfy the professional responsibility and court requirements of the jurisdictions where they practice. But it is becoming evident that improper AI-related actions of others in your sphere, such as your experts, your colleagues, and your co-counsel can negatively impact your cases and your reputation. This experience has undoubtedly been a nightmare for all three attorneys involved. No attorney wants to find themselves in a situation like this, so it’s worth considering what lessons can be taken from Wadsworth et al. v. Walmart Inc. et al. to reduce your AI risk.  

Here are a few questions to consider: 

• Have you comprehensively researched your AI-related professional responsibilities and court requirements in each jurisdiction where you practice, on the federal, state, and local level?  
• If you are a leader in your organization, have you considered requiring the attorneys of your organization to certify that they have researched, read, and understand their AI-related professional responsibilities and court requirements in each jurisdiction where they practice?  
• Does your organization have a policy prohibiting employee use of technology (including but not limited to AI tools) that has not been authorized by the organization? 
• If your organization has implemented one or more AI tools that could produce hallucinations, have you:
  • Required every potential user of the system to attend training on the proper use of the tool and the potential risks associated with using the tool?
  • Considered drafting and implementing written procedures that attorneys are expected to follow to verify the accuracy of AI-related output?  
  • Considered whether to require attorneys to document the steps they take to verify the accuracy of AI-related output?   

• If you have co-counsel or utilize experts on any matters, have you initiated a conversation about your own AI use (if any), and inquired about their AI use, to identify potential AI risks?  

Thanks for being here.

Jennifer Ballard
Good Journey Consulting

 P.S. When you’re ready, I can help you develop your AI competency and AI strategy faster with A Lawyer's Practical Guide to AI. You can get the guide here. 

[i] Order on Sanctions and Other Disciplinary Action, Wadsworth et al. v. Walmart Inc. et al., No. 2:23-cv-00118 (D. Wyo. filed Jul. 6, 2023). 

[ii] Motion in Limine, Wadsworth. 

[iii] Order to Show Cause Why Plaintiffs’ Attorneys Should Not be Sanctioned or Other Disciplinary Action Should Not Issue at 1-2, Wadsworth. 

[iv] Id. at 3, Wadsworth. 

[v] Id. 

[vi] Declaration of T. Michael Morgan in Response to Order to Show Cause at 3, Wadsworth. 

[vii] Id. 

[viii] Id. 

[ix] Id. at 3-4. 

[x] Id. at 4. 

[xi] Id. at 4. 

[xii] Id. at 1-2, 5-6. 

[xiii] Declaration of Rudwin Ayala, Esq. at 2, Wadsworth. 

[xiv] Id. 

[xv] Id. at 3. 

[xvi] Declaration of Taly Goody in Response to Order to Show Cause at 2, Wadsworth. 

[xvii] Id. 

[xviii] Id. at 3. 

[xix] Id. 

[xx] Order on Sanctions and Other Disciplinary Action at 7, 13-15, Wadsworth. 

[xxi] Id. at 10-13. 

[xxii] Id. at 14-15. 

[xxiii] Id. at 7-8. 

[xxiv] Id. at 10.