The role of AI in insolvency litigation: An enhancement but not a replacement for human lawyers in the administration of justice

A duty to act in the best interests of our clients goes to the heart of the legal profession, both functionally and ethically. Can our ability to fulfil this duty be enhanced by the use artificial intelligence (AI)?

There is a common suggestion that AI can perform certain roles better than humans can. However, when it comes to litigation, or insolvency proceedings more specifically, even the most advanced forms of AI, including the latest and previous iterations of ChatGPT, cannot on their own guarantee success for clients in the court room. Experienced, technical, and ethically and commercially conscious lawyers, remain critical.

How AI can help in the court room

Lawyers globally are bound by strict ethical duties and are required to keep their duty to their clients at the forefront of their practice. In an insolvency proceeding, this duty may extend to achieving justice for banks, financial institutions, insolvency practitioners, government taxation entities and specific individuals.

Looking at insolvency law in Australia, there is an intricate web of requirements that are attached to a contentious insolvency claim. In 2023, we are better placed to use digital tools with advanced AI capabilities, like document management systems, to meet these requirements and achieve positive outcomes for our clients. Litigators are now required to digitise the practice of law and be technologically efficient across each stage of a proceeding, and we are already adjusting our practice to do this. From filing the initial statement of claim to submitting closing arguments at the bar table before a Judge, AI can be used to enable litigators to move more swiftly and effectively through each process.

Discovery is an obvious example. Previously, litigators were required to manually wade through and review voluminous tranches of documents, such as books and records of an insolvent holding company and its subsidiaries to prove, for example, that they were improperly deregistered by a fraudulent liquidator. Now, AI can not only review and categorise these documents in a matter of seconds, but can identify and build evidence that will be admissible and persuasive in court, such as affidavits and exhibits.

Further, AI (such as ChatGPT) can draft an email to the court to, for example, seek an adjournment of a matter setting out cogent reasons as to why the court should make the order in favour of  a liquidator bringing voidable transaction claims. What was originally a unique style of writing that was gradually learned by a young litigator as a skill in its own right, is now being directly replicated by a robot with no professional training.

For these reasons, those not close to the detail have expressed views that junior lawyers are expendable. However, this view is often espoused by those who observe the court room from afar, who watch it on TV or who eavesdrop on their colleagues in the shared office kitchen complaining about trial preparation. It must be remembered that you need lawyers to physically prompt AI, check and review output and correct the obvious imperfections that exist in technology before anything goes to court.

AI has a limit

For litigants who have physically (or virtually) sat in the court room, felt the pressure of their clients’  needs, and prepared tirelessly for a hearing before an actual judge, AI is wonderfully beneficial but it can in no way on its own meet the court’s expectations. For example, a judge can interrupt the most experienced senior barrister in their closing submissions, ask any question, seek clarity and expect an adequate and compelling response. In this moment, there is no time to consult ChatGPT and no time to code yourself an answer.