Artificial Intelligence tools like ChatGPT have become popular for creating blogs, drafting documents, and even generating marketing content. While these tools can save time, they also carry serious risks if used incorrectly—especially in the legal sector.

AI models don’t “think” like humans. They rely entirely on the instructions (or prompts) you provide. If those prompts are vague, incomplete, or lack legal context or understanding, the output can be detrimental and end up costing clients more.

A Cautionary Tale
Following an Insolvency Service’s investigation, our client was a director of a limited company and received a S16 notice proposing a Director Disqualification period of 10 years for overestimating turnover on a Bounce Back Loan Application.

Our client came to us and we discussed why they used projected income and the evidence they had to support their explanation. Our client provided various documents for us to review and our director disqualification solicitors advised on what documents were relevant and would assist in defending our clients position.

Our specialist director disqualification solicitors subsequently drafted a detailed response attaching the documents that were relevant to our clients defence and sent this to our Client for their review and approval. Our solicitors required additional information to finalise the letter and requested these details from the client, to be inserted into the draft letter by return.

The client came back with a draft response for our review. However the client had used an AI platform to review and redraft the proposed draft response.   The AI model, as it was not legally trained ,had removed a lot of the content and legal phraseology that is highly beneficial when liaising with the Insolvency Service.  By taking these actions, client had unknowingly significantly undermined their defence.

This action resulted in Altion Law having to explain to the client why this was a mistake and incurred the client additional costs to redraft the final draft.  The client was also made aware that by inserting the letter into an AI model, the model could use the clients personal data to generate systems improvement or to learn for other responses.

The client was ultimately happy with the final draft.

This example highlights a critical lesson: using AI tools without understanding their limitations can seriously undermine your legal position. Our client’s decision to run a carefully drafted legal response through an AI platform resulted in the removal of essential legal terminology and arguments—weakening their defence and increasing costs to correct the mistake.

AI models are not legally trained and cannot replace the expertise of a solicitor. Worse, by uploading sensitive information into an AI system, clients risk exposing personal data, which may be stored or used for algorithm training, creating potential privacy and compliance issues.

Summary:

  • Always seek professional legal advice for director disqualification matters.
  • Avoid using AI tools to edit or draft legal documents—they lack the nuance and compliance knowledge required.
  • Protect your personal and business data by keeping it out of public AI platforms.

If you are facing an Insolvency Service investigation or a proposed director disqualification, contact our specialist solicitors before taking any action. Expert guidance can make the difference between a strong defence and an avoidable mistake.

Expert legal advice

Director Disqualification is a gruelling process that can have a severe effect on those involved. If you are concerned you might be found unfit as act as a director, it is best to seek expert legal advice from us at the earliest available opportunity.

If you have already received a letter from the Insolvency Service, or you believe you may soon receive a letter, please contact us straightaway. We understand what is at stake and will apply our legal expertise to secure a positive outcome on your behalf.

For a confidential discussion with a solicitor, call us today on 01908 414990, email us at hello@altion-law.co.uk or complete our free enquiry form and we will call you back.