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May 2025 Cover Story - Harnessing Generative AI in California Law Firms

by Michael A. Hellbusch

Artificial intelligence (AI) has been steadily reshaping industries across the globe, driving efficiency, consistency, and innovation. The legal profession, traditionally known for its formal procedures and reliance on human judgment, is not exempt from this wave of transformation. In recent years, “generative AI” tools—capable of producing text, summarizing documents, drafting and analyzing legal arguments, and much more—have moved from being theoretical concepts to practical assets in law firms. Yet, with these advances come questions of ethical practice, regulatory compliance, privacy, data security, and liability. Harnessing generative AI in the legal practice must be addressed with a focus on maintaining lawyers’ legal and ethical duties.

The Adoption of AI in the Legal Field
Generative AI encompasses machine learning models trained on vast datasets to create new content. The prevalence of widely available and easily adaptable foundational models has allowed for the emergence of highly focused generative AI legal solutions. Tools like large language models can pore through voluminous case law, statutes, and secondary sources, producing quick insights or summaries that used to take legal research teams hours or days.

Across various practice areas, both generative and machine learning (ML) tools are being leveraged to streamline tasks and enhance decision-making. In litigation, AI-powered platforms can sift through extensive eDiscovery data—pinpointing critical documents, extracting key facts, drafting deposition outlines, and even predicting likely case outcomes based on historical patterns. Corporate attorneys use AI to automate the review and drafting of commercial agreements, monitor compliance, and generate instant legal research summaries for faster counsel. In mergers and acquisitions, algorithms can expedite due diligence by scanning target company contracts to surface risk clauses, uncover change-of-control provisions, and highlight potential regulatory hurdles. Intellectual property (IP) practices benefit from AI that assists with prior art searches, trademark clearance, and even initial patent drafting—helping practitioners reduce manual research hours and spot infringement risks early. Finally, in privacy and data protection matters, ML tools can identify sensitive information, classify it according to relevant laws (such as the CCPA or GDPR), and automatically apply appropriate access controls or anonymization procedures.

As law firms seek new ways to serve clients more efficiently, reduce overhead costs, and increase productivity, these generative AI tools have begun to look increasingly attractive. Early adopters of new technology often enjoy a competitive advantage. Firms that employ generative AI can attract tech-savvy clients who appreciate quick turnaround times and lower billable hours for certain routine tasks. Additionally, attorneys can use AI to identify emerging legal trends and position themselves as leaders in niche areas of practice.

Rather than replacing attorneys, the practical approach is to use these systems as powerful assistants for document drafting, due diligence, legal research, and litigation preparation. However, harnessing the power of generative AI requires an understanding of both its capabilities and the many challenges and obligations that come with it—especially in a regulated profession like the law.

Benefits of Generative AI Tools in the Legal Practice
The most obvious benefit of generative AI is increased efficiency. Routine legal tasks—such as drafting standard motions, pleadings, and contracts—can be partially automated. What might have taken paralegals or junior associates hours to complete can now be done in a fraction of the time. This timesaving can translate to cost reductions for clients, increased profit margins for firms, or the ability to reassign human resources to higher-level tasks—whether more intricate research or direct client engagement. At the same time, this so-called benefit presents challenges to the legal industry. Any seasoned attorney knows that the time spent as a junior associate learning how to draft motions, pleadings, or contracts is necessary experience for improvement as a lawyer. Time will tell how the outsourcing of these critical experience-gaining tasks to AI will impact the quality of legal work in the future.

Another area where generative AI flaunts value is in research and analysis. Generative AI tools can quickly scan large bodies of law, spotlighting relevant facts or precedents. This allows attorneys to access multiple perspectives almost instantly. In turn, they can craft more accurate, comprehensive legal briefs and opinions. Generative AI also has the power to assist attorneys in understanding complex topics outside of the legal space. For example, generative AI can explain in layman’s terms complex topics such as engineering, biology, computer coding, and other industry-specific knowledge. Generative AI can assist lawyers in quickly getting up to speed with the nuances contained in their clients’ businesses and industries.

Client communication can also benefit from generative AI. As mentioned, many generative AI applications excel at explaining complex topics in simpler terms. Such tools can help demystify “legalese” for clients, making the communication process more transparent and user-friendly. While these benefits are significant, practitioners should exercise caution when using AI for direct client communication as such use can implicate issues of competence and unauthorized practice of law if not properly supervised.

AI’s application to the legal industry extends beyond these readily apparent use-cases. AI is being deployed in more sophisticated ways across the legal spectrum. AI and machine learning are being used to predict case outcomes based on past decisions, predict “friendly” judges for a particular case or client, and even assess and predict a client’s willingness or ability to pay. AI in the legal industry means a new era of data-driven, predictive, and highly tailored legal services.

Risks Associated With Using AI in the Legal Practice
Many fear that the rapid adoption of AI will erode the confidence and trust placed in the legal profession by society. With its abundance of benefits, AI presents challenges to the competent and ethical practice of law. Heavy reliance on AI, without the necessary competency and appropriate safeguards, can lead to severe consequences for legal representation. For instance, attorneys who rely too heavily on AI-driven research or document drafting may present incomplete or even inaccurate arguments, raising doubts about the thoroughness and reliability of counsel. If firms fail to implement strict data protections, clients may feel their confidential information is at risk—especially if sensitive data is stored or processed by AI systems not fully under the firm’s control. Furthermore, inherent biases within AI’s training datasets can lead to unjust or skewed outcomes, undermining the profession’s commitment to fairness and equity. Each of these pitfalls, when left unchecked, can weaken the public’s perception that legal practitioners act with rigor, ethical integrity, and independent judgment—traits traditionally at the core of client trust.

California has been quick to consider AI’s impacts on the ethics of legal practice. In November of 2023, the California State Bar released the Practical Guidance for the Use of Generative Artificial Intelligence in the Practice of Law, in which the Bar cautioned that AI “must be used in a manner that conforms to a lawyer’s professional responsibility obligations.” This guidance applies current professional responsibility obligations for lawyers to the adoption and use of generative AI to advance guiding principles rather than best practices.

Many of these guiding principles appear obvious at first blush. For example, the guidance admonishes lawyers against inputting “any confidential information of the client into any generative AI solution that lacks adequate confidentiality and security protections.” Operationalizing such practices may prove challenging. Pell-mell adoption of out-of-the-box AI tools, poor supervision, and misconfiguration of these technologies can result in major breaches of a lawyer’s ethical and contractual duties. Failing to anonymize case details or check a platform’s privacy policy could compromise a client’s privileged information. If a vendor reuses data to train future models, the attorney may be unintentionally exposing confidential material. Legal practitioners would be well-served to gain a baseline technical understanding of AI technology, including their privacy and security risks, before ingesting client data into these tools.

The State Bar’s guidance also warns against the novel risks associated with generative AI, including “hallucination”—the generation of seemingly accurate and complete information that is, in reality, inaccurate and false. Most lawyers are by now aware of the sanctions imposed on lawyers who submitted legal briefs with made-up citations and inaccurate factual statements. These accounts should serve as a warning to others: Overreliance on AI-driven outputs without rigorous human review can lead to overlooked legal strategies, flawed arguments, and even malpractice claims. The State Bar’s guidance reiterates the duty of competence: attorneys must carefully scrutinize AI-generated output for accuracy and correctness, “supplementing and improving, if necessary.”

Bias is another concern in the legal industry potentially exacerbated by AI. AI models learn from existing data, and if that data contains errors, omissions, or biases, the output can reflect those flaws. In a legal context, reliance on erroneous or biased AI-driven analysis can have serious consequences. Social and cultural biases can infiltrate large training datasets, so attorneys must remain vigilant to avoid unintentionally perpetuating bias against certain groups, especially in sensitive areas like criminal or employment law.

Candor is essential to the ethical use of AI. Lawyers should be transparent about their use of AI with their clients, courts, and other parties to whom they owe duties of candor. To fulfill this duty, lawyers should be able to explain not just that AI was utilized in their legal work, but how it was utilized. This requires lawyers to understand how AI functions in more than just general terms.

Practical Considerations for Lawyers Adopting AI
Before embracing AI, lawyers should engage in a cost-benefit analysis. Which processes do you want to automate or augment? Are you looking to speed up contract reviews, streamline litigation document searches, or improve client communication? Clear objectives and metrics for success—whether that’s reduced turnaround times, lower overhead, or enhanced accuracy—can guide the selection and evaluation of AI tools. Law firm decision-makers should develop at least a basic technical understanding of how the AI tools they employ function. Attorneys must know how data is processed, whether the AI model is hosted locally or on a remote server, how updates and patches are handled, and what security measures are in place. Without a working knowledge of the system’s capabilities and limitations, attorneys risk misusing the technology or exposing the firm to security breaches. Practitioners should conduct comprehensive audits of potential AI applications. Implementing robust training programs, establishing firm-wide policies, and clarifying liability concerns can go a long way toward mitigating inherent risks. Moreover, the legal profession’s ethical pillars—competence, confidentiality, candor, and diligence—remain unchanged in the face of new technology. Even as AI becomes more capable, the duty to provide accurate, ethically sound counsel remains in human hands.

Ultimately, generative AI is neither a panacea nor a Pandora’s box. When approached with clear objectives, a keen awareness of limitations, and unwavering commitment to ethical duties, these emerging technologies can open new avenues of legal advocacy. California attorneys, well-versed in the interplay of tech and law, stand at the forefront of a pivotal shift. Embracing generative AI responsibly may well define the next era of successful, client-focused legal practice.

Michael A. Hellbusch CIPP/US, CIPP/E, CIPM, is a Partner at Rutan & Tucker. He can be reached at MHellbusch@rutan.com.