The sanctions record · C.D. California, 2025
Lacey v. State Farm Gen. Ins. Co.
No. 2:24-cv-05205-FMO-MAA, 2025 WL 1363069 (C.D. Cal. May 2025)
Page verified 4 August 2026. We could not reach the order text directly; details below are as reported, with the amount independently confirmed by a later federal opinion.
The case that answered the “but we used real legal AI” defense. Research performed with mainstream legal-AI products, as reported, CoCounsel, Westlaw Precision and Google Gemini, produced a brief in which nine of 27 citations were wrong. Two firms paid $31,100, jointly and severally.
The timeline
- 2024An insurance coverage suit proceeds in the Central District of California, with Ellis George LLP and K&L Gates LLP involved for the plaintiff side, as reported.
- Early 2025Attorneys at Ellis George use CoCounsel, Westlaw Precision and Google Gemini for legal research; K&L Gates, as cooperating counsel, files the resulting brief without independently checking the citations, as reported.
- May 2025The court orders $31,100 in fees and costs, joint and several against the two firms, after finding roughly a third of the brief's citations, nine of 27, were nonexistent or misstated the law. The Westlaw citation for the order is dated 5 May 2025; reporting describes the order of 6 May 2025.
- 23 Jul 2025Judge Manasco cites the $31,100 figure in Johnson v. Dunn, 792 F. Supp. 3d 1241, 1266 (N.D. Ala. 2025), independently confirming the amount.
What the AI did
As reported, the tools involved were not consumer chatbots but products sold to law firms for legal research. They still produced citations to cases that did not exist and statements of law the cited cases did not contain. The reporting also records that one of the tools was used to analyze the brief itself for “obviously bad caselaw”, and flagged nothing.
What the court did, and why
The court ordered $31,100 in fees and costs, joint and several, against both firms. We could not reach the order text directly, so we do not quote it; the figure and the joint-and-several structure are confirmed by the later citation in Johnson v. Dunn and by contemporaneous reporting, which quotes the court describing briefs that “contained numerous false, inaccurate, and misleading legal citations and quotations.”
“contained numerous false, inaccurate, and misleading legal citations and quotations”, as quoted in contemporaneous reporting
What it changed
Lacey is the row in this record most often cited inside large firms, because the defense that failed was the expensive one: a recognized legal-research vendor, plus a second firm that trusted the first. Nine wrong citations out of 27 is a one-in-three failure rate in work product that two firms touched. The lesson later cases keep repeating, grounded tools lower the error rate but do not transfer the duty to read the cited opinion, is the one this order priced at $31,100.
The lesson for the next filing
“A professional tool did the research” is a fact, not a defense. What a court asks for is the record of what the human checked. The Regulayer Receipt seals that record at the moment of filing, which tools, which verifications, whose signature, and any judge can verify it free.
Sources
- Contemporaneous reporting on the order, the firms and the tools (Clearbrief), as reported
- Johnson v. Dunn, 792 F. Supp. 3d 1241 (N.D. Ala. 2025) (PDF), citing Lacey, 2025 WL 1363069, at *5, for the $31,100 award
Related
- The full sanctions record
- Wadsworth v. Walmart, the same lesson with a firm's own tool
- Couvrette v. Wisnovsky, where the fee-award curve ends
- Every verified AI standing order
Checked 4 August 2026. Details marked as reported rest on the linked coverage; the dollar amount is confirmed by a later published federal opinion. Information, not legal advice.
Information, not legal advice. Every entry is verified against the court's own document or contemporaneous reporting; where a source is reporting rather than the document, we say so.