
Judge disqualifies three Butler Snow attorneys from case over AI citations
U.S. District Judge Anna Manasco in a Wednesday order, opens new tab reprimanded the lawyers at the Mississippi-founded firm for making false statements in court and referred the issue to the Alabama State Bar, which handles attorney disciplinary matters. Manasco did not impose monetary sanctions, as some judges have done in other cases across the country involving AI use.
Fabricating legal authority "demands substantially greater accountability than the reprimands and modest fines that have become common as courts confront this form of AI misuse," Manasco said. "As a practical matter, time is telling us – quickly and loudly – that those sanctions are insufficient deterrents."
The case is the latest example of a judge sanctioning or admonishing lawyers as AI-generated "hallucinations" have continued to crop up in court filings ever since ChatGPT and other generative AI programs became widely available. Professional rules require lawyers to vet their work however it is produced.
The three Butler Snow lawyers were part of a team defending former Alabama Department of Corrections Commissioner Jeff Dunn in an inmate's lawsuit alleging he was repeatedly attacked in prison. Dunn has denied wrongdoing.
The judge said the three lawyers' conduct was "tantamount to bad faith." She sanctioned partner Matthew Reeves, who admitted to using AI to generate the citations and including them in the filings without verification. Reeves in a May filing apologized to the court and said he regretted his "lapse in diligence and judgment."
She also disqualified partners William Cranford and William Lunsford, who each signed their names onto the filings. The lawyers said in May filings that they did not independently review the legal citations that were added.
Reeves, Cranford and Lunsford did not immediately respond to requests for comment on Thursday.
The judge declined to sanction Butler Snow, finding the firm "acted reasonably in its efforts to prevent this misconduct and doubled down on its precautionary and responsive measures when its nightmare scenario unfolded."
The firm previously warned its attorneys about the risks of AI and escalated the issue after the court issued an order for the lawyers to explain what happened in the case. Butler Snow also mounted an internal investigation and retained another firm, Morgan, Lewis & Bockius, for an independent review to verify citations in 40 other cases, the judge said.
A Butler Snow spokesperson did not immediately respond to a request for comment. Nor did one of the lawyers representing plaintiff Frankie Johnson, or a lawyer from the Alabama attorney general's office, which had appointed Lunsford to litigate on behalf of the state, according to the order.
The judge ordered the three lawyers to share a copy of the order with their clients, opposing lawyers and judges in other pending state or federal cases in which they are involved, and also to every lawyer at Butler Snow.

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


Reuters
8 minutes ago
- Reuters
This Bezos-backed EV startup is betting you'll pay extra for a stereo in your petite pickup
July 28 (Reuters) - n Will Haseltine saw images online of a small, boxy electric pickup from startup Slate Auto this past spring, he got on the waitlist right away. The sparse interior and crank windows reminded him of the no-frills pickups he grew up around in Memphis, Tennessee – but he was most enamored with the sub-$20,000 price tag. That price, though, factored in a $7,500 federal tax break, which is set to expire Sept. 30, a casualty of the budget package U.S. President Donald Trump signed into law earlier this month. Now Haseltine isn't sure the truck will fit his budget when it comes out, expected late next year. 'The Slate was the first time that I looked at a car, wanted it, and could also really make it happen," said Haseltine, a 39-year-old musical instrument technician. Without the tax credit, he said: "That's just plain too much." ichigan-based Slate has raised $700 million from investors, including opens new tab founder Jeff Bezos, and has racked up more than 100,000 reservations for its cars. But the company is launching into a tough U.S. market. A few years ago, the electric-vehicle space was awash in hopeful entrepreneurs looking to cash in on the global transition to electric cars. But U.S. EV sales growth has cooled as consumer interest has faded. The loss of federal tax breaks will further hurt demand, auto executives and analysts predict. Like other EV startups, Slate likely faces a long road to profitability. The EV business has proven to be a money loser for most industry players, partly because batteries remain relatively expensive. Even in China, where smaller, inexpensive EVs have proliferated and companies enjoy a cost advantage over Western automakers, most are unprofitable. Slate founders believe the company can overcome those obstacles by offering something that is in short supply in today's U.S. car market: affordability. The average new-vehicle selling price is above $45,000. 'We are building the affordable vehicle that has long been promised but never delivered,' Slate CEO Chris Barman said at a Detroit conference in July. The company has a chance to fill a void left by Tesla (TSLA.O), opens new tab, which has backtracked on plans to introduce a mid-$20,000s electric vehicle. The startup has taken a bare-bones approach to its two-seat pickup, which is slightly smaller than a Honda Civic hatchback. How bare-bones? A stereo and power windows will cost extra. Slate hasn't disclosed the cost of such add-ons. te's creation started with an idea from Miles Arnone, the CEO of Re:Build Manufacturing, a Massachusetts-based startup that includes several former Amazon employees. Arnone believed workers needed better access to affordable vehicles. Arnone shared his idea with Jeff Wilke, the company's chairman and a former Amazon executive, and eventually, a small team was formed. The group hired Barman, who spent most of her career as an engineering executive at Fiat Chrysler, now part of Stellantis ( opens new tab. Barman told Reuters recently that Slate will be able to absorb the loss of the $7,500 tax credit because the truck's price still will undercut competitors. The company plans to build the pickup at an old catalog factory in Warsaw, Indiana. Executives are taking steps to hold down costs, starting with a simplified design that uses about 500 parts in the truck's assembly, compared with a few thousand for a traditional truck. The plan to build all of its trucks in a basic package – what the company calls a 'SKU of one' – allows customers to choose to add a stereo, center console, special lighting, and other features later. The pickup will be built with composite body panels in gray, with an option for a vinyl wrap. That will sidestep the need for a paint shop, which is one of the most expensive investments in a typical car factory. late's minimalist approach is a leap of faith that Americans will forgo creature comforts they have been increasingly willing to splurge on. Last year, U.S. buyers spent 33% above the base price on average, springing for higher-end trim packages and extra features, according to opens new tab . That was up from 28% in 2014. But there is mounting evidence that new cars are becoming out of reach for many Americans. That could worsen under the effects of the Trump administration's tariffs, which threaten to increase prices on popular budget cars imported from Mexico, Korea and elsewhere. From that standpoint, Slate's price-conscious pickup might be hitting at the right time, said Paul Waatti, director of industry analysis at AutoPacific. 'There's a growing appetite, especially among younger drivers, for vehicles that are more honest, more modular and less over-engineered,' he said. 'Slate taps right into that.' Traditional automakers and startups have found mixed success rolling out larger electric pickup trucks in recent years. Now, startups like Slate and California-based Telo (TELO.V), opens new tab are focusing on smaller electric pickups. In a town hall meeting in early May, Ford (F.N), opens new tab CEO Jim Farley and Executive Chair Bill Ford told employees they admired the company's customer-centered ethos and focus on affordability. Tim Kuniskis, Stellantis' head of American brands, called Slate 'super interesting' at a June event, while also questioning how affordable it would be for some shoppers once they added all the options they wanted. 'The idea behind it, we've talked about that idea a million times,' he said. "It's a cool idea.'


Reuters
8 minutes ago
- Reuters
Interactive Brokers considers launching new stablecoin for customers
NEW YORK, July 28 (Reuters) - Interactive Brokers Group (IBKR.O), opens new tab is considering launching a stablecoin for customers, joining a number of large financial firms that are betting big on the digital token boom as the U.S. eases regulations around the crypto industry. The deliberations come at a time when the underlying infrastructure of global financial markets is undergoing a once-in-a-generation transformation due to the proliferation of blockchain-based assets like stablecoins. In an interview with Reuters, Interactive Brokers' billionaire founder Thomas Peterffy said the company is working on potentially issuing stablecoins, but has yet to make a final decision on how that will be offered to customers. Interactive Brokers, which is one of the world's leading discount brokers with a market value of about $110 billion, currently has a partnership with crypto platform Paxos and is also an investor in crypto exchange Zero Hash. Through these tie-ups, Interactive Brokers offers trading in various cryptocurrencies to customers. The popular trading platform is now working on enabling instant, 24/7 stablecoin funding for brokerage accounts, as well as supporting asset transfers for commonly traded cryptocurrencies, said Peterffy, who also sounded a note of caution on the risks of rapid widespread adoption of crypto. "It's basically hard to grasp its fundamental value. If we see people adopting it and ascribing a value to it, I'm okay with that, but I'm still not convinced," said Peterffy. Among the options being considered, the Greenwich, Connecticut-based firm could allow customers to use stablecoins issued by other financial institutions to fund their accounts, depending upon the credibility of the issuer. Stablecoins are blockchain-based tokens acting as a proxy for an asset that allow people to move money across borders without interacting with the banking system. Critics have warned that this makes them useful for criminals who want to avoid banks' anti-money laundering checks. Online brokerage firm Robinhood recently launched a stablecoin pegged to the U.S. dollar called the Global Dollar Network through a consortium that included other crypto platforms like Kraken and Galaxy Digital. The Global Dollar Network is based around a stablecoin called USDG, which is issued by Paxos. Interactive Brokers, which last year launched a predictions market called ForecastEx that allows investors to buy "yes" or "no" contracts in response to questions, is one of the largest U.S. trading platforms with about 3.87 million customer accounts at the end of June, a jump of 32% from last year. Like other brokerages, Interactive Brokers has benefited from elevated levels of trading due to market volatility this year that was triggered by U.S. tariff policy. Its shares have surged about 47% since the start of the year, outperforming the S&P 500 Investment Banking & Brokerage index (.SPLRCINVB), opens new tab, which has risen roughly 20% during the same period. "We view the two innovations (prediction markets and crypto investments) as an effective hedge to any disruption in the firm's core equity, futures, and derivatives businesses," Morningstar analysts said in a note dated July 18.


Reuters
9 minutes ago
- Reuters
Wall Street futures boosted by US-EU trade deal ahead of action-packed week
July 28 (Reuters) - Wall Street futures climbed on Monday as a trade agreement between the U.S. and the European Union boosted sentiment at the start of a week packed with megacap earnings, a Federal Reserve meeting and a U.S. tariff deadline. U.S. President Donald Trump and European Commission President Ursula von der Leyen announced a framework trade pact on Sunday, which will halve the import tariff rate on the EU to 15%. At 5:32 a.m. ET, S&P 500 E-minis were up 18.75 points, or 0.29%, Nasdaq 100 E-minis were up 113.5 points, or 0.48% and Dow E-minis were up 85 points, or 0.19%. The anticipation of the imminent U.S.-EU deal propelled the S&P 500 and the Nasdaq to record closing highs on Friday, while the blue-chip Dow remained about 0.4% away from its all-time high hit in December. A flurry of deals with U.S. trade partners, including Japan, Indonesia and the Philippines, helped drive Wall Street to new highs, with all the major indexes posting solid gains last week. Other major economies are still scrambling to strike deals ahead of President Donald Trump's August 1 deadline. The Sino-U.S. negotiations later in the day are expected to extend their trade truce for another 90 days. Markets' unprecedented momentum will be tested with this week's earnings parade from "Magnificent Seven" tech giants Meta Platforms (META.O), opens new tab, Microsoft (MSFT.O), opens new tab, Amazon , and Apple (AAPL.O), opens new tab. Last week, Alphabet's (GOOGL.O), opens new tab surprise capital expenditure hike revived optimism in AI investments and returns, while Tesla (TSLA.O), opens new tab disappointed by foreshadowing difficult upcoming quarters due to dwindling EV subsidies. Tesla rose 1.7% in premarket trading after the automaker signed a $16.5 billion deal to source chips from Samsung Electronics ( opens new tab. The Fed will commence its two-day monetary policy meeting on Tuesday, with traders widely expecting the central bank to hold interest rates steady. According to the CME Group's FedWatch tool, the odds of the central bank delivering the first cut of the year in September stood at 59.8%. Policymakers' comments will be closely analyzed for hints about future rate cuts and whether concerns over tariff-related inflation have eased. The meeting comes after Trump's relentless criticisms of Fed Chair Jerome Powell for not lowering borrowing costs. Trump on Friday suggested Powell might be ready to lower interest rates. Among a deluge of key economic indicators this week, attention will be on the Personal Consumption Expenditure report (PCE) - the Fed's preferred inflation measure - and non-farm payrolls data to gauge how tariffs have affected consumer prices and the labor market. Ether-linked companies Bitmine Immersion Technologies , BTCS (BTCS.O), opens new tab, and GameSquare Holdings (GAME.O), opens new tab rose between 2.7% and 5.3% after Ethereum prices hit over a seven-month high.