Why AI Fabricates Legal Information (And How to Catch It Before It Costs You)
I almost sent my daughter's landlord a fake Ontario statute. Here's exactly what happened and what it taught me about using AI responsibly.
š If this made you think, forward it to a founder who still thinks āAI lies.ā Because maybe, like me, they just need better instructions.
The Day My Chat Friend Lied to Me
This summer, I almost gave my daughter very wrong legal advice.
Sheās in her second year of university. Sheās newly independent and the proud renter of her first āsingle-ladyā apartment (cat and all). She pays rent on time and keeps a spreadsheet for her budget. She is, in every way, a responsible adult.
Her landlord, however, is not.
One night, walking home from work, she lost her mailbox keys. Not a big deal, right? Until her landlord demanded payment equivalent to her entire monthly paycheck for a replacement.
The same paycheck that was, ironically, stuck in her mailbox.
So she did what any smart university daughter of mine would doāshe sicced her lawyer mom on him.
Her lawyer mom (thatās me) sat down to write a firm, righteous letter reminding him of his legal obligations and moral deficiencies. But before hitting āsend,ā I did what every modern woman does when sheās too tired to research case law at 10 p.m.
I asked ChatGPT to draft it.
Thatās when AI scared the poop out of me.
I asked the bot to cite the law on replacement keys in Ontario. It responded confidently, like a first-year associate trying to impress a senior partner:
āUnder section 23(4) of the Ontario Residential Tenancies Act, a landlord may not charge more than the cost of replacement.ā
Perfect, right? Lawyering is so easy nowadays, right?
Exceptā¦I knew better. So I pulled up my big lawyer pants and did my own AI-free research.
You may be surprised to hear what I learned:
ā a) Section 23(4) doesnāt exist, and
ā b) The only thing the law says about keys is that landlords canāt change the locks without giving tenants a replacement key.
The āsourceā it cited? A random PDF from a real-estate conference in 2011. Not a statute. Not even close.
I pushed back. I politely told ChatGPT it was wrong. But it doubled down.
Rude!
Such a liar!
To add insult to injury, if I hadnāt double-checked, my chatbot wouldāve had me send a legal letter full of imaginary lawā¦ on behalf of my own daughter. š³
TBH, this scared me so much my first reaction was to tell the world to stop using AI forever.
But after I calmed down, I realized two things I want every business owner to know:
1ļøā£ AI hallucinates.
2ļøā£ Humans need to use AI better.
AI Didnāt Fail Me. I Was Just a Bad Boss
Why does this matter for business owners? Because AI didnāt lie to me. It did exactly what I told it to do. It found words that sounded right and delivered them with confidence.
AI doesnāt know truth; it predicts patterns. Itās a mirror that reflects our instructions.
When people say āAI hallucinates,ā what they really mean is: we gave it too much room to guess.
And thatās exactly what Iād done. TBH, my prompt was lazy.
I Needed to Train Myself to Talk to the Bot
The next morning, I started over with a real prompt.
And just like that, my āhallucinatingā assistant became a capable researcher.
And thatās the lesson for us business owners: AI isnāt dangerous. Vague leadership is.
Founders talk about delegation all the time, but most of us are bad at it.
We hand over chaos and expect brillianceāfrom employees, contractors, or now, robots.
The fix is the same across all three: clarity.
AI is the worldās most obedient, eager intern. It will do exactly what you askāand throw in a few bonus surprises if you donāt give it boundaries.
If you tell it, āGo write something amazing,ā itāll proudly return nonsense and ask for a pat on the back.
But if you define the job, the scope, and the standards, itāll exceed your expectations every time.
Lesson Learned. Going Forward I Will Be Clearer.
I almost embarrassed myself in front of my own daughter by sending a legally inaccutate letter to her landlord.
But the scare taught me a bigger lesson about leadership.
Business owners who avoid AI because it āhallucinatesā are missing the point.
AI doensāt suck. How they treat it does.
Business owners need to treat it like an eager intern who can read your mind only if you teach it yours.
ā”ļø Learn how to train AI.
ā”ļø Learn how to talk to AI.
ā”ļø Learn how to correct it when itās wrong.
ā”ļø Practice double-check its work (just like you would with any human)
And then it will be your best #1 š employee that deserves every pat on the back you can give it.
š§ Try This with AI
Copy + paste this before your next task to turn a hallucinating robot into your most reliable assistant:
Before completing my request, ask me:
1. Whatās the goal?
2. Whoās it for?
3. What format do I need?
4. What tone or style should it use?
5. What facts must it check or verify?
Once I answer, restate my brief to confirm you understandāthen begin.
š If This Hit Homeā¦
Forward this to a friend whoās still afraid of āAI lies.ā
Because maybe, like me, they just need better instructions.
Thanks for reading!
-Sonya
P.S. Before we could put up a big stink with the stinky landlord, my daughter found her keys in a coat pocket.
P.P.S. This is part of a series about AI for business owners. Next week Iām very excited to share my exact guide on how I train my AI for my business and then the next week Iāll share how to talk to AI (based on the latest research).