Ep. 3: Your Clerk Used AI. Now What?

Disclosure: this episode’s hosts, Mia Hale and Mark Dawson, are AI-generated voices. The script is written and fact-checked by the AI Tools For Law team.

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Stories and sources

Vendor claims are attributed to the vendor; we note what each announcement did not disclose.

Who checked the cite?

Top story

On Oct. 22, the Fifth Circuit vacated a federal judge's injunction and ordered the case reassigned to a different judge, saying the judge's orders contained invented facts and a nonexistent case, errors the judge had blamed on a law clerk's use of AI. On Oct. 21, the Federal Labor Relations Authority said 35 of 42 legal or record citations in a Health and Human Services brief were fictitious, erroneous or irrelevant, and that the agency may have used a generative AI tool. The fix: a cite list on every filing, checked and initialed by the signing lawyer.

The chatbot is not a diary

Courtroom Watch

In a federal defamation case, a plaintiff argues it may subpoena AI providers for the defendant's prompts and chats as evidence of intent to harm, which in that case can lift the cap on punitive damages. As of Oct. 19 it was an argument, not a ruling. Tell clients what they type may not be private, and add AI chat histories to litigation hold checklists.

From memory to review: billing and flat fees

Buyer's Take

8am, a legal billing software company, says 48% of the more than 60,000 firms using its products billed only by the hour in the first half of 2026 and 10% used only flat fees; the company says flat fees made up 88% of invoices at traffic firms and 64% at immigration firms (vendor data). Review drafted time entries daily, and before moving a matter type to flat fees, write a scope sheet with milestones and check your state's flat-fee rules.

Who wrote your intake script?

The Short Docket

If an answering service picks up your phones, a lawyer should write the script: names first for the conflict check, only what you need to decide whether to take the matter, and a request not to share details yet. Supervise the service like your own staff.

Terms explained in this episode

Vacated: Set aside by a higher court.
Injunction: A court order requiring someone to do, or stop doing, something.
Subpoena: A legal demand for documents or testimony, here aimed at a company that isn't a party to the case.
Punitive damages: Damages meant to punish, not just to compensate.
Litigation hold: The instruction to preserve evidence once a dispute is likely.
Practice management software: The system a firm uses to run matters, calendars and billing.
Standing order: A court's or judge's standing rules for its cases.
Conflict check: Screening names against your existing and former clients before you take on a matter.

Transcript

Cold open

Mark: A federal appeals court took a case away from a judge. Not a lawyer. A judge.

Mia: Over what?

Mark: The court said the judge's orders had invented facts in them. And a case that doesn't exist.

Mia: Let me guess. AI.

Mark: The judge blamed a law clerk's use of AI.

Mia: So if it can happen in chambers, it can happen at your firm. Here's the fix.

Mia: This is Legal AI This Week, from the AI Tools For Law team. I'm Mia Hale.

Mark: And I'm Mark Dawson. Coming up: that judge, a lawsuit where one side wants the other side's chatbot chats, and what billing data says about flat fees. Plus a quick one on who answers your phones.

Top story

Mia: Okay, back to the judge. What actually happened?

Mark: On October twenty-second, the Fifth Circuit, one of the federal appeals courts, vacated an injunction the judge had issued. Vacated means set aside. Then it sent the case to a different judge. The court said the orders contained invented facts and a nonexistent case, and the judge had blamed those errors on a law clerk's use of AI.

Mia: So "my clerk did it" didn't save the order.

Mark: Or the case. Now picture a five-lawyer firm. There's no law clerk. There's a paralegal or a junior associate drafting, maybe with AI.

Mia: And the signature on the brief is yours.

Mark: It is.

Mia: And it's not one court, either. A day earlier, the Federal Labor Relations Authority said thirty-five of forty-two legal or record citations in a Health and Human Services brief were fictitious, erroneous or irrelevant. It said the agency may have used a generative AI tool.

Mark: Thirty-five out of forty-two.

Mia: So, honestly, why not just ban it? No AI drafting. Done.

Mark: I get the instinct. Wrong lesson.

Mia: Convince me.

Mark: The failure that matters is that nobody checked. A ban doesn't add a check. People keep using the tools quietly, and now you don't even know AI was involved.

Mia: A ban is at least clear.

Mark: So is a checkbox. Whoever drafts builds a cite list: every case cited, with a working link to the opinion. The lawyer who signs opens every link and asks two questions. Does the case exist? Does it say what we say it says? Then they check the facts against the record, and initial the list.

Mia: And somebody writes the rules down.

Mark: One page. Which tools are allowed, what gets verified, who signs off. Then add a "cite list verified" box to the filing step in your practice management software, the system you run matters and calendars in. No box, no filing.

Mia: Fine. You win. A ban says "don't." A checkbox says "who."

Mark: I'll take it.

Mia: There's an ethics side too. Opinion 512, the ABA's guidance on generative AI, points to competence, confidentiality, client communication and reasonable fees. So check the output, and supervise whoever drafts.

Mark: Your state's own rules control. And before you file, check whether your court has a standing order on AI use. That's a court's or judge's standing rule for its cases.

Courtroom watch

Mia: This next one will make some clients nervous. In a federal defamation case, the plaintiff argues it can subpoena AI companies for the defendant's prompts and chats.

Mark: Subpoena the chatbot company? For what?

Mia: Intent. The theory is that the chats show intent to harm, and in that case, that kind of evidence can lift the cap on punitive damages. Those are damages meant to punish, not just to compensate.

Mark: Has a court said yes?

Mia: Not as of October nineteenth. It's an argument, not a ruling.

Mark: Then why give it airtime?

Mia: Because a chatbot is not a diary. If your client typed their side of the story into one, someone may come asking for it. So, Monday: one plain-English line in your new-client welcome packet. "Don't discuss your case with AI chatbots. What you type may not be private, and it could be sought in litigation."

Mark: Then say it out loud at the first meeting. Nobody has ever read a welcome packet.

Mia: Nobody. Second, litigation holds. That's the instruction to preserve evidence. Put AI chat histories on your preservation letter and your client hold checklist, right next to texts and email. For your own clients, and in the demands you send the other side.

Mark: Okay, here's where I'd slow down. Should every litigator now demand the other side's chatbot history?

Mia: No. If intent is part of your case, it may be worth asking about in discovery. That's a strategy call for the lawyer, not a template line.

Mark: Fair. Now turn it around. What is your own staff pasting into these tools?

Mia: That's the uncomfortable part. Ask if a tool trains on what you type. If so, talk to the client first.

Mark: So know which tools your people use, and what those tools keep.

Mia: And know that privilege and discovery rules for AI chats are unsettled. They vary by court and by state.

Buyer's take

Mark: Billing. Start with the Friday afternoon problem.

Mia: Trying to remember what you did on Tuesday.

Mark: That one. For a small firm, the money leak usually isn't the rate. It's time that never gets entered.

Mia: So if software drafts my timesheet from what I actually worked on, problem solved?

Mark: Drafts.

Mia: Drafts?

Mark: Big difference. A draft is not a bill. Each evening, take a few minutes: approve, edit or delete. At month end, your billing person works only from approved entries and spot-checks the descriptions, so no client sees something vague or embarrassing.

Mia: Here's my pushback. A tool that watches everything I do is also seeing client information.

Mark: Fair. Check how the vendor stores, uses and secures that data before you turn it on.

Mia: Which raises the bigger question. Should small firms bill by the hour at all?

Mark: In one big data set, hourly still wins easily. 8am, a legal billing software company, says forty-eight percent of the more than sixty thousand firms using its products billed only by the hour in the first half of 2026. Ten percent used only flat fees.

Mia: Ten percent. That's it?

Mark: Overall. But the company says flat fees made up eighty-eight percent of invoices at traffic firms, and sixty-four percent at immigration firms.

Mia: My guess? Those matters look the same every time.

Mark: That's the test. Pull last year's matters by type and pick the one or two most predictable. Write a scope sheet: what's included, what isn't, and milestones, like a set share earned at filing and the rest at the hearing.

Mia: Two warnings. Flat-fee rules vary by state, so check yours.

Mark: And second?

Mia: Reasonableness. If AI makes the work much faster, ask whether your fee still feels reasonable to the client.

Mark: So the scope sheet isn't set-and-forget. When the work gets faster, look at the fee again.

The short docket

Mia: Quick one on intake. If an answering service picks up your phones, AI, live agents or both, who wrote the script?

Mark: Hopefully a lawyer.

Mia: It should be. And it starts with names. The caller, the other parties, any opposing counsel, for the conflict check. So you never take both sides. The story comes after.

Mark: Some callers won't like giving names first.

Mia: Then tell them why, and keep it quick. So the script asks only what you need to decide whether to take the matter, and tells callers up front not to share details yet.

Mark: And you supervise that service like your own staff. If AI answers, check your state's rules on telling callers they're talking to AI.

Takeaways

Mark: Three moves for Monday morning.

Mia: One: a cite list on every filing, and a lawyer clicks every link.

Mark: Two: tell clients a chatbot isn't a diary, and put AI chats on your hold checklist.

Mia: Three: review your time entries every day, before they turn into a bill.

Mark: And check your state's rules on all of it. This isn't legal advice.

Mia: That's Legal AI This Week, from the AI Tools For Law team. New episode every Friday at aitoolsforlaw dot A I. Sources are in the show notes.

Mark: Spotted an error? Email hello at aitoolsforlaw dot A I.

About the show

Not legal advice. Corrections: hello@aitoolsforlaw.ai.

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