OpenAI faces $10.3m lawsuit in Illinois after ChatGPT allegedly provided unlicensed legal advice that led a user to reopen a settled case and file meritless court claims

OpenAI is facing a lawsuit in Illinois alleging that its ChatGPT AI system acted as an unlicensed lawyer, exposing the company to $300,000 in compensatory damages and $10 million in punitive damages. The claim arises from an incident involving Nippon Life Insurance Company of America, where a ChatGPT interaction allegedly provided legal guidance that led a user to reopen a previously settled case and subsequently flood a federal court with meritless filings. The plaintiff argues that OpenAI was practising law illegally in the state of Illinois — a regulated activity requiring licensure under state bar rules — and that the harm caused by the AI's outputs is directly attributable to OpenAI. The case goes to the core of one of the most contested questions in AI and law: whether a general-purpose large language model (LLM) — a type of AI system trained on vast text datasets to generate human-like text — can be held liable for practising law without a licence when its outputs are used in legal contexts. US state bar rules and, analogously, the Solicitors Regulation Authority (SRA) rules in England and Wales prohibit the provision of reserved legal activities by unregulated entities. The case is an early but significant test of how courts will apportion liability when AI systems cross from information provision into what is effectively legal advice.

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