On March 5, a federal lawsuit was filed against OpenAI alleging that the company engaged in the unauthorized practice of law through its large language model ChatGPT.
The plaintiff, Nippon Life Insurance Company of America, claims that OpenAI is responsible for legal actions taken by a former disability claimant who allegedly relied on advice generated by ChatGPT. According to the complaint, the claimant used guidance from the chatbot to attempt to reopen a previously settled disability claim.
Nippon alleges that the legal filings made by the claimant were meritless, were created with the assistance of ChatGPT and forced the insurer to incur unnecessary legal costs. The company is seeking $300,000 in compensatory damages and $10 million in punitive damages. It is also requesting a court order declaring that OpenAI violated Illinois’ unauthorized practice of law statute, according to the complaint.
The case was filed in the U.S. District Court for the Northern District of Illinois in Chicago.
The claimant herself is not named as a defendant in the lawsuit. Nippon states that the woman dismissed her attorney and proceeded to pursue the claim after consulting ChatGPT.
The insurer argues that ChatGPT is “not an attorney” and “has not been admitted to practice law in the State of Illinois or in any other jurisdiction within the United States.” Nippon also alleges that OpenAI revised its policies in October to bar users from using the platform for legal advice, claiming that the policy previously contained no such prohibition.
Unauthorized practice of law is illegal in all 50 U.S. states. The lawsuit raises questions about whether AI-generated guidance could cross the line from providing general information about laws into offering personalized legal advice.
People frequently use chatbots to gather information in a way similar to how they use search engines, like Google. However, search engines primarily direct users to existing sources, while generative AI systems can produce tailored responses based on specific facts provided by a user. If a user provides an AI system with detailed information about a personal legal situation and receives direct guidance or drafted legal filings in return, the complaint suggests that could potentially constitute unauthorized practice of law.
The case also highlights how generative AI is increasingly being used for tasks traditionally associated with legal work, including drafting documents, summarizing material and referencing large bodies of legal information. At the same time, courts are still grappling with how AI should be used within legal proceedings. Recently, two Florida judicial circuits issued rules requiring lawyers to disclose when artificial intelligence tools are used in court filings.
OpenAI rejected the allegations, saying in a statement to The New York Post Friday that “this complaint lacks any merit whatsoever.”
The case is Nippon Life Insurance Company of America v. OpenAI Foundation and OpenAI Group PBC, U.S. District Court, Northern District of Illinois, No. 1:26-cv-02448.
