Sullivan & Cromwell’s Legal Snafu Shreds AI’s Productivity Hype

A few days ago, the law firm Sullivan & Cromwell LLP apologized to the chief judge of Manhattan’s US Bankruptcy Court for a court filing with AI-hallucinated citations. Andrew Dietderich, co-head of the firm’s global restructuring group, wrote the judge that the firm’s “comprehensive policies and training requirements governing the use of AI tools” had not been followed. A secondary review process also failed. A database of similar incidents that had around 90 entries a year ago now has 1,333. Many are from pro se litigants and small-firm practitioners. Now add one of America’s leading firms.

It’s unlikely this is just about law firms. Their errors are in public court filings. But all professional service firms, even ones like Boston Consulting Group, Goldman Sachs Group Inc., and the Big Four accountants, have a similar business model – they have partners who oversee teams of associates and check their work. The more associates per partner, the more the partners earn. That’s what’s known in professional services as leverage, and it’s so important that law firms are actually ranked by profits per partner. But this model means they’re all going to struggle to capture the economic gains artificial intelligence seems to promise, because partners’ ability to supervise and verify AI-enabled work will become the rate-limiting step to the firms’ growth.