Judges are increasingly concerned about artificial intelligence (AI) and its implications for the legal system and its use by testifying experts. Programs are being developed internally to educate the courts and lawyers on AI’s role in legal processes, and the valuation profession can play a key role in this effort, according to judges who conducted a session at the recent NACVA 2024 Business Valuation & Financial Litigation conference last week in Las Vegas.
New risks: While many judges recognize the potential of AI to streamline processes such as legal research, case analysis, and document summarization, they also worry about the risks it introduces, according to a panel that included Judge Steven I. Platt (retired full-time Circuit Court judge in Maryland who now does settlement and mediation work) and Judge Timothy Driscoll (New York State Supreme Court—Commercial Division). The session moderator was forensic accounting, business valuation, and litigation expert Michael Kaplan.
A primary concern, as you would imagine, is the reliability of AI outputs, particularly the risk of hallucinations, where AI generates false or fabricated information. Judges are also wary of biases embedded in AI algorithms, which can affect fairness and accuracy in cases where AI plays a role in forming arguments or expert opinions. These issues raise questions about how much courts can trust AI-generated evidence or analyses, the judges said.
Additionally, judges are concerned about the ethical and procedural challenges posed by AI. For instance, questions arise about whether the use of AI must be disclosed in court, how AI-generated materials should be scrutinized, and whether AI tools compromise confidentiality, especially when sensitive data are input into third-party platforms. Another pressing issue is the lack of clear rules and standards governing AI’s use, which places a burden on the judiciary to adapt quickly and develop appropriate guidelines.
Help needed: Valuation experts often act as educators to the courts when explaining their methodologies and processes, and this should extend to AI. The judges asked the experts in the audience to explain clearly how they verify AI outputs, cross-check data, and maintain accountability for their conclusions. Additionally, the valuation profession can work with judicial bodies to establish best practices and guidelines for the ethical and responsible use of AI, including how to address issues like bias and data validation. This proactive approach will help courts gain confidence in the use of AI and its ability to enhance, rather than undermine, the legal process.
The session covered much more, and there were some good questions from the audience—there is detailed coverage in the February issue of Business Valuation Update.