Top law firm admits AI hallucinations in high-profile bankruptcy filing

Sullivan & Cromwell, a 145-year-old Wall Street institution, has admitted to a federal bankruptcy court that an April filing contained numerous AI-generated fabrications.

The errors, which included non-existent case citations and misquoted statutes, appeared in a 9 April motion filed in the US Bankruptcy Court for the Southern District of New York.

The firm represents liquidators from the British Virgin Islands in their pursuit of claims against the Prince Group and its owner, Chen Zhi, who is accused of directing global scam operations.

The inaccuracies were first uncovered by opposing counsel at Boies Schiller Flexner, who identified at least 28 erroneous citations.

These included fictitious quotes attributed to the court and case law from entirely different circuits. Sullivan & Cromwell's restructuring head, Andrew Dietderich, wrote to Chief Judge Martin Glenn on 18 April to acknowledge that internal AI policies—which require extensive training and verification—had not been followed.

"I apologise on behalf of our entire team," Dietderich wrote, confirming that the firm’s "trust nothing and verify everything" protocol was ignored.

While the firm corrected the filing and attributed the hallucinations to a failure in its secondary review process, defendants argued the late revisions were prejudicial.

This incident adds to a growing list of AI-related legal missteps, following recent sanctions of other attorneys for similar unverified research.

The firm has since undertaken a comprehensive review of all case filings to ensure no further AI-related errors remain.

Sullivan & Cromwell continues its involvement in the complex Chapter 15 proceedings as the legal community grapples with the accelerating risks of generative technology.