UK High Court of Justice: The present hearing concerned a block transfer application dated 17 March 2026. Such applications are usually decided without a hearing. However, the Court directed that this matter be listed due to concerns about misleading statements made by the applicants’ former solicitors, Pinsent Masons LLP (Pinsent Masons), in two letters to the court dated 30 March 2026 and 14 April 2026. ICC Judge Mullen, considering the use of AI in legal practice, AI chat transcripts, concluded that the said letters were likely the result of a serious lack of care and judgment by the junior associate, rather than dishonesty. There was no evidence that the associate checked the AI-generated references and it appeared they had largely relied on the AI to do the thinking.
Thus, the Court held that there is, at the very least, a prima facie case of breach of the duties not to mislead the Court and not to waste its time. It is for the Solicitors Regulation Authority (SRA) to determine, following its own investigation, whether breaches of the code have occurred and what sanction, if any, is appropriate.
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Background
In this case, by email dated 20 March 2026, the Court raised a query with Pinsent Masons asking what power existed to order release, noting that such a power exists in administration but not expressly in liquidation under sections 173 or 174. Pinsent Masons LLP responded by letter dated 30 March 2026. The letter proposed, as an alternative, that discharge be granted in respect of the administrations only.
The issue of whether the Court can order a liquidator’s release on a block transfer application is not settled, and views differ. Therefore, the Court was taken aback by the suggestion that there was a clear rule in the Insolvency (England and Wales) Rules 2016 (IR Rules). The Court checked the relevant rules and searched for the cited wording but could not find it. Thus, the initial concern was that this might have been an AI “hallucination” arising during Pinsent Masons’ research.
Thus, the Court sent an email, asking Pinsent Masons where those words are to be found and explain why they have asserted, in terms, that a rule contains express powers that it does not? A letter in response, dated 14 April 2026, again proposed the alternative course set out in the 30 March Letter.
The Context: Block Transfer Applications
The Court has the power to remove an insolvency practitioner from office (such as trustee, liquidator, or administrator) and appoint a replacement. This may arise where the practitioner wishes to step down, for example due to retirement or moving firms. Where a practitioner holds multiple appointments, the IR Rules allow them to apply once to be removed from all roles. This is known as a “block transfer application.”
These applications are administrative and uncontentious. They are dealt with by an ICC Judge as part of routine paper-based work. The judge reviews the documents and, if satisfied, makes the order. There is no standard form of order.
Analysis, Law, and Decision
The Court noted that the 30 March letter contained a misleading statement of the law. It presented a quotation said to be from statute, but no such provision existed. On reviewing the evidence, the explanation was that a junior associate had used AI for research, and the AI generated the quotation. The associate did not verify it, nor did their supervisors. The associate relied heavily on AI, failed to check its sources, and did not inform supervisors that AI had been used or that it had warned the text was unverified. Further, the Court noted that the 14 April letter attempted, after the event, to justify the earlier statement by suggesting the purported text was only a summary of provisions in the IR Rules rather than a quotation. This explanation was unjustified and amounted to a further instance of misleading the court, rather than correcting the position.
The Court considered the AI chat transcripts and concluded that the letters were likely the result of a serious lack of care and judgment by the junior associate, rather than dishonesty. There was no evidence that the associate checked the AI-generated references and it appeared they had largely relied on the AI to do the thinking. The Court noted that it was difficult to see how the junior associate could have viewed the purported text as a paraphrase. The failure to verify the AI’s references, combined with inexperience, might explain why the associate did not realise there was no reasoning and that the text had simply been invented.
The Court held that there is, at the very least, a prima facie case of breach of the duties not to mislead the Court and not to waste the Court’s time. It is for the SRA to determine, following its own investigation, whether breaches of the code have occurred and what sanction, if any, is appropriate.
In particular, the SRA should consider:
(i) the extent to which the junior associate checked the AI-generated references and whether they honestly believed the statements in the 30 March letter were accurate; and
(ii) why a misleading explanation was given in the 14 April letter.
These issues should be assessed in the context of any AI training provided and what the associate knew, or ought to have known, about its use.
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Use of AI in Legal Practice
The Court acknowledged that the work was carried out under pressure but held that this did not excuse the failure to check the accuracy of material placed before the Court. The risks of using AI are now well known, and the Court’s earlier query should have prompted care in its use. The Court indicated that, had the true position been clearly explained and an appropriate apology given, it might have treated the matter as a regrettable error causing no real harm, requiring no further action beyond ensuring that Pinsent Masons bore the related costs.
The Court emphasised that legal professionals remain ultimately responsible for their work and cannot delegate legal research or reasoning to AI. AI is only a tool and must be used with caution, as it can be unreliable. While it may assist as a starting point, it does not replace the need for proper research, careful thought, and professional judgment, even for junior lawyers.
[Anthony Malcolm Cork v. Mark Smith, Case No: CR-2026-002244, decided on 22-5-2026]
Advocates who appeared in this case:
For the Applicants: Andrew Brown (instructed by Irwin Mitchell LLP)
For Pinsent Masons LLP: Paul Mitchell KC (instructed by Clyde & Co LLP)
