TL; DR
- The ADGM Court imposed a wasted costs order on a law firm for filing a defence containing false, inaccurate, and misapplied legal authorities.
- The errors were found to be consistent with the improper use of AI-assisted legal research combined with inadequate human verification.
Key Rulings:
- Lawyers remain fully responsible for the accuracy of pleadings and authorities, regardless of whether AI tools are used.
- Time pressure or a lack of resources do not justify failures to fullfill professionalduties owed to the Court.
- Where defective AI-assisted submissions cause costs to be wasted, the Court may order indemnity costs against legal representatives.
- The judgment provides authoritative guidance within the ADGM on how existing professional standards apply to the use of AI in litigation.
Context
In a decision issued on 18 December 2025, the ADGM Court of First Instance considered the implications of relying on AI tools for legal research and drafting purposes without effective human review. The Court imposed a wasted costs order on a law firm whose defence relied on multiple incorrect, misleading, and non-existent legal authorities. The case was used to provide clear guidance on the professional duties that apply when lawyers rely on AI-driven
research or automated drafting tools, clarifying the professional obligations ie accuracy, competance, and candor, which remain firly with the lawyer.
Case Details
The proceedings arose from a significant contractual dispute concerning an employee share option plan. The defendant’s legal representatives filed an exceptionally long defence that was heavily footnoted with legal authorities. The claimant challenged the defence on the basis that it contained numerous errors, including references to non-existing cases, incorrect citations of real decisions and reliance on authorities for propositions they did not support.
Shortly before a scheduled hearing, the defendant withdrew several applications and later resumitted the defence following a change of legal representation. Despite this, the claimant pursued costs applications, including an application for wasted costs against the defendant’s former lawyers. The claimant argued that substantial time and expense had been incurred in dealing with a pleading that should never have been filed in its original form.
Based on these findings, the law firm was ordered to pay a significant proportion of the claimant’s costs as wasted costs on an indemnity basis.
Use of AI and Professional Responsibility
The Court acknowledged that, although the increasing use of AI technologies in legal practice may improve efficiency, these tools carry an inherent risk of generating false or misleading information.
The responsibility for any AI-generated output lies entirely with the lawyer using it. The fact that an error originates from an AI tool does not absolve the lawyer of their personal obligation to ensure that any cited authority exists and is referenced correctly, and that it genuinely supports the argument put forward.
In practical terms, the judgment makes it clear that AI-generated content is unreliable unless it is verified independently. Therefore, verification against authoritative sources is a necessary step before any AI-assisted research can be incorporated into pleadings or submissions.
Why This Matters
This decision is significant for the practical guidance it provides on the use of AI in litigation. The Court made clear that problems arising from AI-assisted research are not treated as a separate or novel risk, but as straightforward failures to meet basic professional standards. In other words, the same expectations around accuracy, judgment, and verification apply, regardless of whether AI tools are used.
Where such failures result in misleading material being presented to the Court and unnecessary costs being incurred, the financial consequences can fall directly on the lawyers involved, including exposure to indemnity costs orders.
In issuing a detailed, publicly reasoned decision, the ADGM Court also signaled that these issues have broader relevance to litigation practice before the ADGM Courts and should be treated as a clear warning rather than an isolated outcome tied only to the facts of this case.
Key Takeaways
- AI tools can be used for legal research and drafting purposes, but they do not reduce professional responsibilities.
- AI-generated content must be independently verified against authoritative sources before being relied upon.
- Lawyers remain accountable for the accuracy and relevance of authorities cited.
- Improper AI-assisted submissions may result in indemnity and wasted costs orders.
