Sullivan & Cromwell Cites AI Hallucinations in Court Filing, Issues Apology

Sullivan & Cromwell (S&C) represents liquidators appointed by the British Virgin Islands in actions against Prince Group, owned by businessman Chen Zhi. Last year US prosecutors charged Chen with wire fraud and money laundering, alleging his operation of forced‑labour scam compounds across Cambodia stole billions. Separately, prosecutors filed a civil action to confiscate nearly $9 billion in bitcoin they claim traces to Prince Group’s illicit proceeds. Chen was arrested in Cambodia earlier this year and extradited to China.

In an April 9 submission, S&C’s filing contained misquotations of the US bankruptcy code and incorrect case citations. Boies Schiller Flexner (BSF), co‑counsel on the matter, identified the errors and notified S&C. Andrew Dietderich, co‑head of S&C’s global restructuring group, apologized in a letter to Judge Martin Glenn, thanked BSF for flagging the mistakes, and expressed regret on behalf of the firm. S&C said it maintains comprehensive AI‑use policies but acknowledged those policies were not followed and a secondary review missed the AI‑generated inaccuracies. The firm later filed a corrected version with the court.

The episode highlights the risks of relying on generative AI for legal drafting without rigorous human oversight. While lawyers are not barred from using AI, ethical rules demand they verify every citation and factual assertion before submission. The incident may prompt law firms to revisit training, enforce secondary checks, and seek clearer guidance from bar associations on AI accountability.