Generative Artificial Intelligence (Gen AI) is revolutionising industries at an unprecedented pace, and the legal sector is no exception. As businesses and professionals adopt AI-driven tools, questions about accuracy, reliability, and ethical use are becoming increasingly urgent.
In response to growing concerns—especially regarding over-reliance in the corporate and legal sectors—the Supreme Court of NSW issued Practice Note SC Gen 23 – Use of Generative Artificial Intelligence (SC Gen 23). This directive, effective from 3 February 2025, outlines rules for using closed-source and open-source large language model Gen AI in legal proceedings.
The Rise of Gen AI in Legal Practice
Gen AI is undeniably transforming legal work. It helps streamline tasks such as drafting documents, summarising case law, and preparing chronologies. However, these efficiencies come with risks, particularly in maintaining consistency, accuracy, and the integrity of legal instructions.
Legal practitioners must manage these risks to ensure that AI supports, not undermines, the legal process. As Gen AI continues to reshape legal practice, staying informed about evolving regulations like SC Gen 23 is essential. Professionals must also apply best practices to use AI responsibly while protecting the integrity of court proceedings.
What Is Generative AI?
According to the Practice Note, Generative AI refers to tools that create new content, such as text, images, or sound, by analysing patterns in training data.
However, this excludes AI tools used for:
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Spelling and grammar assistance
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Formatting support
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Generating chronologies from original documents
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Any function that does not create meaningful or original content
Uses in Legal Proceedings:
Permitted & Prohibited
Understanding the specific applications where Gen AI is permitted or restricted is crucial for legal practitioners. The following table outlines these distinctions:
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Permitted Uses of Gen AI |
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Permitted Uses of Gen AI (Subject to Leave) |
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Prohibited Uses of Gen AI |
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Confidentiality and the Harman Undertaking
A major concern is whether using Gen AI could breach the Harman undertaking, a principle that prevents materials disclosed in litigation from being used for other purposes.
Legal professionals must not enter confidential material—such as court files, transcripts, or documents under suppression orders—into Gen AI systems. Many Gen AI tools operate on cloud-based platforms, raising risks of unauthorised storage or sharing.
To comply, lawyers must:
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Understand how their AI tools handle data
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Avoid uploading protected information
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Maintain control over case-sensitive material
AI Hallucinations: A Legal Risk
Another growing issue is AI hallucinations—where Gen AI fabricates or invents information. This includes false citations, made-up case law, or misleading legal analysis.
Case in point:
In Handa v Mallick [2024] FedCFamC2F 957, a solicitor submitted a list of cases created using AI software. The court later found the citations were fake. Justice Humphreys required the solicitor to explain why he should not be referred to the Victorian Legal Services Board for disciplinary action.
Best Practice Tips for Legal Professionals
To reduce risk, legal professionals should:
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Use Gen AI only where permitted under SC Gen 23
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Seek leave before using AI for restricted tasks
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Independently verify all AI-generated content
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Stay informed on any updates to SC Gen 23
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Maintain critical thinking and professional judgment—don’t over-rely on AI
Generative AI in law offers powerful advantages but demands caution. By following the rules under SC Gen 23, legal practitioners can ensure they innovate responsibly without compromising the legal system’s integrity.
Curious how AI is shaping modern legal practice?
At Madison Marcus, we leverage AI to support faster, more accurate case preparation, always within court-approved boundaries.
Get in touch to see how we can help you.
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This article is provided for general informational purposes only and does not constitute legal advice. While every effort is made to ensure the accuracy of the information provided, Madison Marcus Law Firm makes no representations or warranties, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the content. Readers are advised to seek professional legal advice tailored to their specific circumstances before taking any action based on this information. Madison Marcus Law Firm accepts no liability for any loss or damage incurred as a result of reliance on the information presented herein.
