Ethical Governance of Artificial Intelligence Hallucinations in Legal Practice

Abstract

This paper examines the ethical and legal challenges posed by “hallucinations” in generative‐AI tools used for legal drafting—instances where language models fabricate case citations or statutory text with convincing authority. Drawing on a comprehensive review of professional‐responsibility rules, civil‐liability doctrines, and technical mitigation strategies, the study assesses how existing frameworks address, or fail to prevent, AI‐induced errors in attorney filings. Empirical benchmarkingdata reveal that leading retrieval‐augmented models still produce fabricated authorities in up to one-third of complex queries, while sanctions under traditional malpractice and negligence regimes remain retrospective and inconsistent. Comparative analysis of U.S. and EU liability proposals—the AI Liability Directive and the Revised Product Liability Directive—highlights gap in coverage for bespoke legal services. In response, the paper proposes an integrated governance model combining binding bar-association standards (mandatory AI‐literacy training, provenance logging, and human-in-the-loop review), statutory safe-harborprovisions granting rebuttable presumptions of compliance, and robust technical protocols. The study concludes by recommending targeted rule‐making, pilot programs to evaluate framework efficacy, and incorporation of AI governance curricula in legal education, thereby safeguarding the integrity of legal practice in the AI era.