For lawyers, SB 574 draws an important but undefined line: an attorney may use GenAI to “assist in the practice of law” but may not “delegate the practice of law” to GenAI. The statute does not define where assistance ends and delegation begins—an issue that may become more significant as lawyers use GenAI for legal research, drafting, document analysis, contract review, discovery, investigations, and other substantive legal work.
SB 574 does not distinguish between attorneys who work at law firms and those in corporate legal departments. California-licensed in-house lawyers who use GenAI are equally subject to the new requirements. As a result, legal departments may want to revisit internal AI policies, approved technology platforms, litigation workflows, information controls, and expectations for outside counsel before the law takes effect.[1]
WHAT SB 574 REQUIRES
Attorney use of GenAI. New Business and Professions Code Section 6068.1 permits lawyers to use GenAI to assist in the practice of law but prohibits them from delegating the practice of law to GenAI. Attorneys using GenAI must protect confidential, personal identifying, and other nonpublic information; take reasonable steps to verify GenAI output and correct erroneous or hallucinated material they use; disclose GenAI use for documents submitted to a court; and consider whether disclosure is appropriate for content provided to the public.[2]
Court citations. SB 574 also amends Code of Civil Procedure Section 128.7 to require the attorney responsible for submitting a Covered California court filing to personally verify its citations. The requirement expressly includes citations supplied by GenAI but applies regardless of whether GenAI was used. Existing Section 128.7 sanctions procedures and its discovery exception remain in place.[3]
Arbitrators and ADR. SB 574 regulates arbitrators’ use of GenAI. New Code of Civil Procedure Section 1282.1 prohibits an arbitrator from delegating any part of the decision-making process to GenAI. It also prohibits an arbitrator from relying on GenAI-generated information outside the record unless the arbitrator first makes appropriate disclosures to the parties and, as far as practical, gives them an opportunity to comment on its use. The statute preserves arbitrators’ existing duties of neutrality, competence, and diligence.[4]
Judicial guidance. SB 574 also directs the Judicial Council of California to revisit and revise, as necessary, its guidance concerning judicial use of GenAI.[5]
WHAT SB 574 MEANS FOR LEGAL DEPARTMENTS
SB 574 may require legal departments to look beyond whether GenAI is generally permitted and focus more closely on how particular legal workflows are structured. In-house teams should consider whether existing policies adequately address attorney review and verification of AI-assisted work, distinguish AI assistance from the transfer of substantive legal judgment to an automated system, and account for the use of increasingly autonomous AI tools.
The statute also raises information governance issues. Its restriction is not framed simply in terms of whether a lawyer uses a “public” or “enterprise” AI product. Rather, it focuses on whether access to confidential, personal identifying, and other nonpublic information entered into the system is restricted to the attorney and authorized persons subject to confidentiality obligations. Legal departments therefore may want to assess whether approved platforms, vendor arrangements, and access controls enable their California-licensed lawyers to comply with the statute.
Litigation procedures may warrant particular attention. Legal departments and their outside counsel should consider whether existing processes adequately identify GenAI use associated with court submissions, determine when and how that use will be disclosed, and ensure that the attorney responsible for a Covered California court filing personally verifies its citations. The statute does not specify the form of the required GenAI disclosure or establish a threshold level of GenAI involvement that triggers disclosure, leaving questions about how the requirement applies to uses such as research, summarization, proofreading, editing, or drafting.
SB 574 also provides an opportunity for companies to consider their expectations for outside counsel’s use of GenAI. Depending on the company and matter, outside counsel guidelines may address the handling of company information in GenAI systems, attorney review of AI-assisted work, compliance with court disclosure requirements, and the use of autonomous or agentic AI workflows. These are governance considerations rather than requirements SB 574 itself imposes on corporate clients.
For companies that regularly use arbitration, SB 574 may warrant consideration of how prospective arbitrators and ADR providers use GenAI and whether arbitration protocols or engagement terms should address AI use. SB 574 also amends the State Bar’s voluntary certification program for ADR providers.[6]
DOES SB 574 BAR PARTICULAR USES OF GENAI?
Not categorically. The law is better read as regulating how GenAI is used rather than prohibiting specified categories of substantive legal work. Its text expressly contemplates GenAI being used to assist in the practice of law.
SB 574 does not identify AI-assisted legal research, drafting, summarization, document review, contract analysis, discovery analysis, investigation support, or similar substantive legal tasks as categorically prohibited. Instead, it imposes guardrails: attorneys may not delegate the practice of law to GenAI, must comply with the statute’s information protections, must take reasonable steps to verify GenAI output and correct erroneous or hallucinated material they use, and must comply with applicable disclosure requirements.
The more difficult question is whether a particular workflow crosses the line from permissible assistance into prohibited delegation. The statute does not supply a specific test. As GenAI tools become capable of performing increasingly complex, multistep tasks with less human intervention, the degree of attorney direction, review, and independent professional judgment associated with a workflow is likely to become an important consideration.
STEPS LEGAL DEPARTMENTS SHOULD CONSIDER BEFORE JANUARY 1, 2027
Legal departments should consider the following prior to January 1, 2027:
- Inventory current GenAI use by its lawyers and identify the tools and legal workflows in which GenAI is being used
- Review information controls and approved platforms against the statute’s restrictions on confidential and nonpublic information
- Update AI policies and training to address verification, court disclosure, and attorney responsibility, and the assistance-versus-delegation distinction as applicable
- Review outside counsel guidelines to determine whether expectations concerning GenAI use, company information, and AI-assisted legal work should be addressed
- Coordinate litigation procedures for GenAI disclosure and citation verification in California matters
- Consider the new arbitration requirements when selecting or working with arbitrators and ADR providers
- Monitor further guidance from the State Bar, Judicial Council, courts, or other tribunals concerning the statute’s application
SB 574 marks California’s move from applying existing professional responsibility principles to GenAI toward imposing express statutory requirements. The law expressly contemplates AI-assisted legal practice while preserving attorney responsibility and leaving important questions concerning delegation, disclosure, and increasingly autonomous AI workflows. For legal departments, the practical challenge before January 1, 2027, may therefore be less about deciding whether lawyers can use GenAI and more about ensuring that existing governance, technology, and outside counsel practices keep pace with how lawyers are actually using it.
HOW WE CAN HELP
Morgan Lewis is closely tracking the legal, regulatory, and practical issues surrounding the use of AI. Our cross-practice AI team includes lawyers across disciplines—including technology, data privacy and cybersecurity, litigation, labor and employment, intellectual property, corporate transactions, regulatory matters, and other areas—to help clients address AI governance, adoption, risk management, and compliance.
As AI technologies and the laws governing their use continue to develop, we work with clients to evaluate emerging requirements and translate them into practical approaches for their businesses and legal departments. Please contact the authors of this LawFlash with questions about SB 574 or other AI-related legal, regulatory, governance, or implementation issues.
