Across the country, courts, judges, and legislatures are developing a patchwork of rules to address the emerging use of generative artificial intelligence (AI) in the practice of law. Most focus on protecting confidential client information and preserving the integrity of the profession. For example, the new California Rule of Court 10.430 requires California state courts to set AI use policies for judges and court staff. And, earlier this year, the State Bar of California’s Standing Committee on Professional Responsibility and Conduct proposed changes to the Rules of Professional Conduct to explicitly address a lawyer’s use of generative AI and provide practical guidance, reflecting the potential benefits and risks of using AI and how it affects lawyers’ ethical obligations.

California Senate Bill 574 continues this trend by proposing amendments to the Business and Professions Code and the Code of Civil Procedure, impacting both lawyers and arbitrators. The new requirements fall into four categories: (1) keeping nonpublic information out of public AI systems; (2) ensuring non-discriminatory use of generative AI; (3) requiring the filing attorney to read and verify citations—even those not generated by AI; and (4) ensuring that arbitrators do not delegate decision making to AI and are transparent in their use of AI. 

Protecting Confidential Information Starts with the Prompt

SB 574 seeks to protect against an attorney’s disclosure of confidential and personal information from its first interaction with a public generative AI tool—the “prompt.” The newly proposed Section 6068.1 of the Business and Professions Code makes it an attorney’s “duty” to ensure that such information is “not entered into a public generative artificial intelligence system.” (Emphasis added). 

Importantly, this provision is limited to “public” generative AI tools and does not explicitly govern an attorney’s use of “private” or “closed” tools. But an attorney’s ethical obligations and a client’s own guidelines may require informed consent before using private AI tools—or prohibit it altogether.

AI Use Must Be Non-Discriminatory

In alignment with California’s civil‑rights framework, SB 574 requires attorneys to avoid AI‑assisted conduct that unlawfully discriminates against or disparately impacts protected individuals. Attorneys must also take reasonable steps to remove biased or offensive content in AI-generated material, even when prepared by others on their behalf.

The Signer of a Filing Must Personally Read and Verify Sources––Even When AI is Not Used

While most of SB 574 applies only when generative AI systems are used, its amendment to Code of Civil Procedure Section 128.7 is broader. The proposed rule impacts the drafting of any “brief, pleading, motion or other paper filed in any court” regardless of whether AI is used. It requires that all citations have been “personally read and verified” by the “attorney responsible for submitting the pleading.” This means that prior to filing, the proposed legislation technically requires that the attorney signatory must have read and verified the accuracy of all cited sources. 

This requirement may be the surest way to keep AI-generated hallucinated cases out of the record, but it could significantly affect how law firms prepare court filings. Under current rules, cite-checking and verification tasks can be performed by more junior attorneys or paralegals at lower billing rates. The new rule, however, would require the “attorney responsible” for the filing to personally read and verify each cited source.

Under existing Section 128.7(b), Rule 11 of the Federal Rules of Civil Procedure, and many courts’ local rules and standing orders (some of which now specifically address AI use), signing attorneys are already responsible for pleading accuracy—and are routinely sanctioned when AI-hallucinated cases appear in briefs. The proposed amendments to Section 128.7, however, would be violated where the signing attorney did not “personally read and verif[y]” the citations—even if the filing itself is accurate and regardless of whether AI generated the citations. As written, there seems to be no room for the signatory to delegate this responsibility. This could significantly impact the cost of legal services throughout the state. 

Arbitrator Decision-making and Transparency

A new Code of Civil Procedure Section 1282.1 sets guardrails for arbitrators using AI. Under this section, an arbitrator may not delegate decision‑making to a generative AI tool and AI cannot replace the arbitrator’s independent analysis of facts, law, and evidence. The bill also cautions arbitrators to avoid delegating tasks to AI that might influence procedural or substantive decisions, walling off support tasks from anything that might sway outcomes. 

Even where an arbitrator contemplates AI‑generated information outside the record, Section 1282.1 requires advance disclosure to the parties and, as far as practical, an opportunity for comment. It also warns the arbitrator against assuming sources exist or are fairly described, and they must be verifiable independent of the AI tool. Ultimately, the proposed legislation requires that the arbitrator assume full responsibility for “all aspects” of an award, regardless of the use of generative AI. 

Key Takeaways

In Senator Umberg’s words, SB 574 “protects those receiving legal services by codifying certain safeguards.” The bill cleared the Senate 39-0 and is pending in the Assembly, which has until August 31, 2026 to send it to the governor.

The bill is intended to keep responsibility and judgment with professionals as tools evolve. If it passes in its current form, attorneys must guard nonpublic information at the prompt stage, protect against discriminatory AI use, and “personally” read and verify all cited sources in filings they sign, whether AI-generated or not. And arbitrators must own their decisions and be transparent about their use of generative AI. But it may also have some unintended consequences, including potentially driving up the cost of legal services in the state by mandating that the attorney responsible for submitting a filing personally read and verify every citation in a brief.

Reprinted with permission from the May 27, 2026 issue of The Recorder. Further duplication without permission is prohibited. All rights reserved.

Subscribe to Farella Insights by topic and author here.