Lawyers for the former chief executive of cosmetics giant Lush, Andrew Gerrie, have hiked their fees ahead of a trial this month, partly as they will not allow junior staff to train their AI model, City AM can reveal. 

A court heard this morning that Gerrie’s legal team from Brown Rudnick have pushed up a requested litigation budget to £6.1m, with the fees for disclosure spiking over 50 per cent from an estimated £500,000 to over £1.1m, in which the firm is using AI to review disclosure documents.

The legal feud stems from a fallout between Gerrie, the former chief executive of the beauty company – known for creating colourful bath bombs – and the current chief executive, Mark Constantine, before Gerrie stepped down from his position in 2014.

Gerrie’s legal team justified the cost hike in part by arguing they could only allow senior lawyers, who charge the highest hourly fees, to train an AI model to review up to 30,000 disclosure documents. 

This is a task which would typically be completed by trainee lawyers and junior associates, who charge the lowest fees, but Gerrie’s team said they are not employing any junior staff in this process. 

“The risk is the junior fee earners will inappropriately program the model,” Gerrie’s legal representative told the court. 

Insolvency Judge Mathhew Parfitt noted the sharp increase since January “raises eyebrows” and criticised an over-reliance on only senior earners. 

However, Parfitt said he believes this to be “the correct way of proceeding” and understood the need for more senior earners training the AI, but added that “it does seem to be unbalanced to have a fee earner time of a large amount at the higher rate.”

The next chapter in the legal fiasco is set to hit the courts at the end of the month, will last nineteen days and involve hearing from seven witnesses including Gerrie and his wife Alison Hawkesley, who both still own a stake in the company, and Constantine and his wife Margaret, a co-owner of Lush. 

A central part of the trial will focus on whether Gerrie chose to voluntarily exit the company in 2014 when he stepped down or whether he was forced out by Constantine.

Hallucinations wrecking havoc in legal

Lawyers’ use of AI has been hitting the headlines for months now as firms come under scrutiny for failing to check whether AI-generated facts are correct. There have been several examples of the technology creating ‘hallucinations’ where it fabricates facts and citations.

The most recent example in the City comes from top law firm Pinsent Masons which was criticised by a High Court judge in May after a junior lawyer sent the court AI-generated letters containing false legal information. 

A judgment handed down on 22 May found a junior solicitor at the firm used AI to draft two “misleading” emails containing so-called hallucinations sent to the High Court in March and April this year during an insolvency case where the firm was acting for the applicants.

This follows elite US firm Sullivan & Cromwell which in April had to apologise for multiple AI hallucinations in a bankruptcy case.