The featured case in the January issue of Business Valuation Update is a New York matter in which a damages expert used an artificial intelligence tool to help with his analysis. The court determined his testimony to be unreliable and set standards for admission of testimony and reports based in part on the use of AI.
In the dark: The expert used a generative AI tool to cross-check calculations, but he was unable to explain the prompts he used, the sources the tool relied upon, or its operational mechanics. Also, the AI tool’s outputs changed when given the exact same prompts, causing the court to be concerned about consistency and reliability. The court also underscored the need for transparency, finding that the use of AI in legal evidence should be disclosed and subjected to pretrial hearings to ensure fairness and accuracy.
This is the first case we know of that addresses the use of AI in a valuation or damages context, and it provides some insight into how courts in other jurisdictions may respond.
The case is Matter of Weber, 2024 N.Y. Misc. LEXIS 8609; 2024 NY Slip Op 24258, and a case analysis and full court opinion are available on the BVLaw platform.