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New York's court system codified AI rules effective June 1, 2026—attorneys may use AI to prepare filings but must independently verify submissions contain no fabricated cases or statutes.
The FTC and multiple state attorneys general are targeting AI chatbots with coordinated enforcement actions over deceptive claims and manipulative design — forcing consumer protection compliance into core product development.
The Great American AI Act's three-year moratorium on state consumer AI protections has sparked a revolt from attorneys general, consumer advocates, and labor groups who say the federal floor is too low.
Attorneys submitting AI-generated briefs with hallucinated case citations are facing mounting sanctions — while courts split on bans vs. deterrence, and law firms warn clients that chatbot use may destroy attorney-client privilege.
Major law firms are now writing AI privilege warnings into client contracts as courts sanction attorneys for AI-hallucinated citations — two converging risks the legal profession is only beginning to reckon with.
With federal AI legislation stalled, state attorneys general are deploying existing consumer protection, employment, and privacy statutes against AI companies. Colorado and Texas laws are live. A constitutional showdown over federal preemption is forming.