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Category: AI & Billing / Fees

Federal Judge: Can’t Use ChatGPT to Justify Attorney Fees

February 22, 2024

A recent Law 360 story by Madison Arnold, “Law Firm Scolded For ‘Misbegotten’ ChatGPT Use in Fee Bid”, reports that a Manhattan federal judge criticized a special education-focused law firm or citing ChatGPT calculations to back up its attorney fee request of more than $100,000, calling the move "utterly and unusually unpersuasive."  U.S. District Judge Paul A. Engelmayer knocked the fees for the Cuddy Law Firm PLLC down to just $53,050.13 plus interest for work done in a case brought by a parent on behalf of a child against the New York City Department of Education involving two administrative hearings.

The firm had asked for $113,484.62 plus interest after securing judgments against the department, saying the feedback from the generative artificial intelligence program supported its request.  "As the firm should have appreciated, treating ChatGPT's conclusions as a useful gauge of the reasonable billing rate for the work of a lawyer with a particular background carrying out a bespoke assignment for a client in a niche practice area was misbegotten at the jump," Judge Engelmayer wrote.

An attorney for the department, Tom Lindeman, said in a statement to Law360 Pulse that his side is pleased with the decision.  "The firm's use of ChatGPT to support its aggressive fee request was deemed inappropriate and, as the court determined, the city's prior offer to resolve fees was fair and reasonable," Lindeman said.  The parent of an unnamed child, referred to as G.G., hired the Cuddy Law Firm.  G.G. has hyperactivity disorder, a language disorder, a developmental coordination disorder and acute stress disorder, according to the decision.

The child's parent, referred to as J.G., initiated two due process hearings, alleging in the first that the department failed to provide the child with a free appropriate public education for the 2017-2018 and 2018-2019 school years.  That included failing to provide annual reviews, evaluations and appropriate education services and implementing special education teacher support services, as mandated by the child's individualized education program from January 2018.

The Cuddy Law Firm sought compensation for its work in both hearings and resulting fees litigation.  While the firm doesn't rely predominantly on ChatGPT-4 in arguing for its billing rates, it did present the findings of the AI program as a "cross-check," Judge Engelmayer said.  He added that the law firm failed to identify any information it inputted into ChatGPT for it to rely on to confirm its calculation, among other omissions.

"The court therefore rejects out of hand ChatGPT's conclusions as to the appropriate billing rates here.  Barring a paradigm shift in the reliability of this tool, the Cuddy Law Firm is well advised to excise references to ChatGPT from future fee applications," the judge said.  Because of the inefficiencies of the ChatGPT argument, as well as its other arguments, the court decided to reduce the attorney fees awarded to the Cuddy Law Firm.

"For the reasons stated, the court grants J.G.'s motion for an award of fees and costs, but in an amount below that sought.  J.G. is awarded $52,386.01 in fees and $664.12 in costs, for a total of $53,050.13, plus post-judgment interest at the applicable statutory rate," Judge Engelmayer said.  Outside the ChatGPT issue, the court reduced the fees in part because the parent and the Cuddy Law Firm had not given evidence that the case presented novel or complex legal or factual issues.

California Bar Adopts AI Guidelines Tackling Legal Billing

December 26, 2023

A recent Law 360 story by Sarah Martinson, “Calif. Bar Adopts AI Guidelines Tackling Confidentiality, Billing”, reports that the California bar has approved guidance for attorneys using generative software — systems that produce images and text — addressing confidentiality, competence, nonlawyer supervision and billing, as other states consider passing similar guidelines.

Erika Doherty, program director for the bar's Office of Professional Competence, said at a meeting of the California bar's board of trustees that the guidelines would be the first addressing large language models, or LLMs, to be approved by a regulatory agency for lawyers.  "The benefit of that is that there is guidance available for lawyers as of right now," she said.  "The downside of that is that this is an evolving technology, and so it's going to need to be continually updated."

The guidelines advise attorneys not to input client information into any generative tool without sufficient confidentiality and security protections, and to consult with information technology or cybersecurity professionals about whether an system meets strict confidentiality, security and data retention requirements.

To meet competency requirements, attorneys should understand how the tech, generally referred to as generative AI, works and its limitations before using it, the guidelines say.  "Overreliance on AI tools is inconsistent with the active practice of law and application of trained judgment by the lawyer," they say.  On non-lawyer supervision, the guidelines advise managerial and supervisory attorneys to establish clear policies for the use of generative AI.

The guidelines also advise attorneys to charge for actual time spent working on crafting prompts and editing outputs and not to charge for time saved using the technology.  "A fee agreement should explain the basis for all fees and costs, including those associated with the use of generative AI," they say.

Since OpenAI LLC released its chatbot ChatGPT in November 2022, lawmakers and state bar authorities have been trying to figure out the best way to regulate the technology.  In June, a New York judge sanctioned two personal injury attorneys for submitting a ChatGPT-generated brief that cited nonexistent case law, finding the lawyers "abandoned their responsibilities" to check their work, and their behavior rose to "bad faith" when they then waited weeks to come clean.

This month, the State Bar of Michigan issued an opinion saying that judges have an ethical obligation to understand advancing technology, including so-called artificial intelligence, and to ensure its use in the legal system is consistent with the law.  And a Florida bar ethics committee released proposed guidelines for how attorneys can ethically use generative AI in their legal work.  Those guidelines addressed confidentiality, oversight, billing and advertising. Florida bar members have until January to comment on the proposed guidelines.