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Insurer Warns Lawyers About Perils of ChatGPT

April 19, 2023

eDiscovery Today published a post on April 14 about an insurance company which sent law firms a warning about using ChatGPT in their practices.

Attorneys’ Liability Assurance Society Ltd. (ALAS), a mutual insurance carrier that serves law firms, sent out a newsletter-style bulletin to its policyholders titled “ChatGPT—Not Ready for Prime Time.” The message warns attorneys that usage of Open AI’s ChatGPT has significant legal risks, from potential data privacy violations to AI “hallucinations” to the burden of disclosure that may come with its use.

“We do recognize that this landscape in terms of AI is changing, and that it’s important for attorneys to understand new technologies as part of the core competencies under rule 1.1 of the [ABA] model rules,” Mary Beth Robinson, Senior Vice President of Loss Prevention at ALAS, said. “We are not taking a ‘no, never’ approach to innovation—but we are concerned that [law] firms could get carried away, and [forget] that this technology is not a substitute for critical thinking.”

The law firms ALAS insures have asked about the use of ChatGPT and generative AI when it comes to basic legal work, like drafting contracts and initial parts of the legal workflow, Robinson said. But as the bulletin the carrier sent out states, even with human review at later stages of drafting, using ChatGPT can create multiple risks for law firms if they are not careful.

For example, the email notes some ethical rules that have the potential to be violated using the technology. These include: ABA model rule 1.1, which requires attorneys to provide competent representation to clients; rule 1.4, which requires lawyers to be transparent and consult their clients about the means by which the client’s objectives are to be accomplished; rule 8.4 which states it is professional misconduct to be dishonest about a legal process with a client; and rule 1.6 which requires attorneys to protect confidential client data.

Robinson said the concerns around ChatGPT use don’t extend only to violation of ABA rules but may also lead to further scrutiny by cybersecurity insurers.

She noted that “if there is a cyber intrusion [into OpenAI or ChatGPT], not only will that data potentially be lost to threat actors, but they could conceivably also obtain the firm’s searches… [gaining] access into the mind of a lawyer and the arguments they might be raising.”

No surprise that insurers are beginning to warn lawyers about the dangers of using generative AI. My guess is that you’ll start seeing questions on cyberinsurance renewal applications about the use of generative AI. Insurance companies may charge higher premiums or refuse coverage related to the use of generative AI. We are only seeing the tip of the iceberg thus far.

Hat tip to Doug Austin.

Sharon D. Nelson, Esq., President, Sensei Enterprises, Inc.
3975 University Drive, Suite 225, Fairfax, VA 22030
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