Over recent years, it has been impossible to ignore the impact that artificial intelligence (AI) has had on every aspect of our personal and working lives. AI Large Language Models (LLMs) such as ChatGPT, Claude and DeepSeek are used by millions every day to speed up or simplify complex tasks.
When used responsibly, they can be a potent tool. But they’re far from infallible and increasingly being used to cut corners, often with disastrous consequences.
One such high-profile case recently saw the Abu Dhabi Global Market (ADGM) Courts order a law firm to pay wasted costs after submitting court documents that contained fictitious AI-generated case citations. The firm failed to verify the AI’s output, wasting court time and resources from the opposing party.
It’s far from an isolated incident, with more cases emerging globally and in the UK. But these cases serve as a vital reminder to practitioners of the need for stringent due diligence.
Read on as we unpack the consequences of the ADGM case, the rise of similar cases in the UK and why this matters, with insight from Athene Legal’s director, Tyler McEwen.
What happened in the ADGM Case?
The Arabyads Holdings Limited vs Gulrez Alam Marghoob Alam case first came to light at the end of 2025. The landmark case, believed to be the first of its kind in the UAE, saw Justice Paul Heath KC award costs on the indemnity basis against the defendant’s solicitors.
The firm involved had submitted a ‘prolix’ defence, which included references to cases that did not exist, and provided incorrect citations for others. The Court judged that this conduct, particularly the lawyer’s failure to verify legal research conducted through AI, was reckless and amounted to a breach of the ADGM Rules of Conduct.
In its ruling, the Court stated that “lawyers using AI tools for research purposes should start from the premise that all authorities and/or articles on a particular topic that are revealed by AI research may not necessarily be accurately summarised in the response, or indeed may not exist.”
The ADGM Court concluded that without necessary verification, lawyers are at risk of misleading courts. But far from being a unique incident, similar cases of AI misuse have also been reported in the US, UK and Qatar.
An emerging trend: AI failures across jurisdictions
This decision follows a separate incident in the UK where a law firm was ordered to pay wasted costs after the submission of an application that cited two AI-generated cases, which turned out to be fictitious.
As first reported by Legal Futures, an unnamed law firm was acting for a former student of Birmingham City University in a claim for breach of contract, negligence and fraud. However, when the university’s solicitors were unable to locate the cases and asked for copies of them, the student’s solicitors did not respond. Instead, they withdrew and re-submitted the application without the fictitious cases.
The firm later told the courts that the previous application had been submitted “in error”, and had been a result of an administrative member using the in-built AI tools from widely available legal software.
The claim and application were struck out with indemnity costs, and the claimant’s solicitor filed witness statements accepting that the cases had been AI-generated and were fictitious.
The ADGM ruling also mirrors the guidance from another UK-based case, Ayinde v London Borough of Haringey [2025] EWHC 1383 (Admin). Here, Mr Justice Ritchie said that, in citing five fake cases, the behaviour of the solicitor had been improper, unreasonable and negligent, and ordered them to pay wasted costs.
“I should say it is the responsibility of the legal team, including the solicitors, to see that the statement of facts and grounds are correct. They should have been shocked when they were told that the citations did not exist,” Mr Justice Ritchie was quoted as saying in his remarks.
AI tools are often known to suffer from ‘hallucinations’ – where the LLM provides confident but false or misleading responses, often through fabricated information. Yet as AI tools become increasingly prevalent, it’s likely that there will be many more cases like those mentioned, both in the UK and abroad.
Why this matters: the duty of care to the court
AI can be beneficial to legal practice, particularly in improving efficiency and supporting research. But as Athene Legal’s director, Tyler McEwen explains, AI misuse is an increasing problem and one that has severe consequences for practitioners.
“In the UK, lawyers are officers of the Court, and they owe a duty to the Court not to mislead it,” he says. “It is unacceptable to rely on legal research that is not thoroughly checked and verified. Failing to do so causes other parties to spend time and costs searching for cases that do not exist.”
Tyler acknowledges that AI is becoming more popular in legal practice, but stresses the importance for legal professionals to ensure that it is always used correctly and beneficially.
“While AI can be used by law firms to great effect in tasks such as document review and analysis, contract analysis, legal research and predictive analysis, there are no excuses for relying on unverified AI output. The sanction for misusing AI is becoming very clear – it will lead to a wasted costs order,” he warns.
The lesson from these cases is simple: lawyers must check and verify all AI-generated research, and treat AI as a tool rather than a replacement for professional judgement.
“No matter how plausible an AI-generated citation looks, it’s your professional duty to check it independently. The technology will continue to improve, but the time you save using AI isn’t worth the costs order you’ll face if you get it wrong,” Tyler concludes.
The bottom line: professional standards in the age of AI
AI isn’t going away any time soon, and neither should it. It has enormous potential in legal practices, yet needs to be balanced with rigorous professional standards, staff training and a culture where checking AI output is non-negotiable.
From a costs perspective, the cases outlined in this article demonstrate that failing to verify AI research is not only financially reckless. It’s also potentially disastrous to the reputation of lawyers and legal firms.
But while wasted costs orders can be substantial, they’re still entirely avoidable with proper diligence.
Do you require assistance with recovering or opposing costs arising from a wasted costs order or need expert advice on costs in your case? Athene Legal’s team of specialist cost lawyers are here to help, with offices in London, Birmingham and Southampton. Get in touch with us today by filling out our contact form and arranging a consultation.
