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  • Writer's pictureHarmony Oswald, Esq.

2024 State of Courts: The AI Discovery Period



Over the past few years, equipment finance professionals looking to litigate default accounts commonly experienced “long Covid” - lingering, related backlogs in courts across the U.S. In 2023, the most innovative finance professionals took a stand to oil the wheels of justice by demanding tech-savvy legal support for both direct and indirect benefits. Now, with AI, fraud, and bankruptcy claims on the rise and with repeated calls for action to adopt new technologies that enhance efficiency, the pressure is building in the courts. In 2024, the justice system is now entering the AI Discovery Period.  


Rising Litigation 

According to OneLegal, it’s estimated that there are more than 40 million lawsuits filed each year in the U.S. and more than 95% are filed in state courts. In 2022 in CA Superior Courts alone, there were 4.4 million case filings. 222,381 were unlimited civil cases (seeking over $25,000), 351,685 were limited civil cases (seeking $25,000 or less), and the rest were small claims, criminal law, and others. 


Trending Artificial Intelligence (AI) Lawsuits

In the U.S. and Europe, lawsuits are rolling in for copyright infringement claims. The conflict arises when AI companies train new technologies using data from the internet without permission from data creators. Companies being sued include, for example, Github, Microsoft, OpenAI, Stability AI, Meta, and Google. According to TechTarget, “Many people feel it’s time AI companies paid for the free data lunches that have made their generative systems big and strong.”


Worldwide Fraud Claims Rise

Fraud prevention is on the minds of finance professionals around the world. According to Juniper Research, digital fraud losses are expected to surpass $343 billion globally by 2027. In 2023, the Financial Crimes Enforcement Network (FinCEN) issued an alert to American financial institutions regarding a surge in check fraud schemes targeting the U.S. Mail. Criminals typically steal business or other checks and may continue to exploit victims by using the identification information provided to commit future fraud. Also in 2023, UK law firm Stewarts and Solomonic published an analysis of litigation trends. The data shows that fraud claims have increased, both as standalone figures and proportionally in the context of other claims. An increased awareness of fraud and willingness to bring fraud claims in court may explain the findings.  


Bankruptcy Filings Up

According to uscourts.gov, business bankruptcies rose nearly 30 percent in the twelve month period ending September 30, 2023. According to statistics released by the Administrative Office of the U.S. Courts, annual bankruptcy filings totaled 433,658 in the year ending September 2023, compared with 383,810 cases in the previous year. It’s the third straight quarter that bankruptcy filings have risen, following more than a decade of decline. Even with recent increases, however, total filings remain far lower than in 2010, when filings peaked at just less than 1.6 million. 


Pressure Builds in the Court 

The sole act of filing legal papers may send a clear message to a bad acting borrower, personal guarantor, or lessor, but judicial officers and staff members must actually process the filings and move cases through the judicial system for justice to finally arrive. According to a study released in 2023 by Thomson Reuters Institute and cited by ABA Journal, many courts in the United States are currently overburdened and under-resourced, and the court system is facing a “perfect storm” of delays, backlogs and workforce shortages. 68% of survey respondents said their courts faced workforce shortages in the past year, while 58% said their staffing budgets stagnated or decreased. 44% said backlogs have increased in the last two years, and 45% said caseloads are increasing. 

In 2023, Oswald Law Firm’s Tenor Ickes called for change, stating that finance professionals have an unprecedented opportunity to demand legal support that leverages high-tech tools to streamline processes, improve efficiency, and deliver better outcomes. The National Center for State Courts (NCSC) takes a similarly progressive position. They focus on improving the administration of justice through initiatives to enhance court policies and procedures, improve court leadership and governance, and offer legal technology to promote judicial efficiency. For example, NCSC recently released an interactive tool, the Court Backlog Reduction Simulator, to help courts reduce backlogs. The United Nations Educational, Scientific and Cultural Organization (UNESCO), is also helping to close the judicial / technology knowledge gap, and as an enhancement to the Global Judges Initiative, now offers courses on Artificial Intelligence (AI) and the Rule of Law. Further, high-tech tools from companies like Casetext, Spellbook, and Linksquares are becoming readily available to help make tasks like document review, research, deposition preparation, contract drafting, analysis, and negotiations more efficient for attorneys as well.    


The AI Discovery Period

According to the NCSC, for a while now, some judges have been using AI in limited ways such as automating acceptance and docketing of E-filed documents or simulating human conversation with chatbots. However, the recent fast paced development of generative AI to create content is leading to new opportunities and demands while elevating concerns in today’s courts. 

Financiers and other professionals are placing a call to action, encouraging judges to discover and learn who in their courtroom should become educated about AI, what use cases apply, why and how they should get up to speed, and the timeline. Use cases may include, for example, automated data entry, docketing, scheduling, AI assisted creation of court documents, AI assisted identification and resolution of data quality issues, AI assisted identification of complex cases, new methods and channels for serving litigants, new insights into court data, increased access to public records, and new internal tools for working more efficiently. Courts are being urged to prepare for the future now because according to NCSC, judges can expect that in 2 to 5 years most of today’s AI technologies will be mainstream, in 5 to 10 years there will be even more advanced AI, and in 10+ years, there may be human level AI.  

Judges have increasingly been releasing standing orders that apply to technologies such as generative AI, Machine Learning (ML), Natural Language Processing (NLP), Large Language Models (LLM), Robotic Process Automation (RPA), and big data tools. Among the most pressing issues of judicial concern include, for example, AI discrimination, technology access disparities, authentication of evidence, rapid changes and updates, software integration issues, talent acquisition challenges, skepticism in the legal field, and attorney education. 

Technology will continue to impact equipment finance professional’s substantive rights and obligations in vast and unimaginable ways. Today’s judicial officers have a significantly important leadership role to play in order to increase access to justice and encourage public confidence in American institutions. Are courts up to the challenge?


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The author, Harmony Oswald, is a U.S. Army veteran and a CA commercial finance litigator. She earned her Juris Doctor degree at Santa Clara Law, where she received a High Tech Law Certificate with Honors. Harmony serves on ELFA's Innovation Advisory Council and on ELFF's fraud research steering committee. In May 2022, Harmony was a guest speaker at the AACFB Annual Conference (Charlotte, NC) at their "fraud roundtable." In Oct. 2023, she was a guest speaker at the NEFA Funding Symposium on AI / Fraud (San Antonio, TX), and at the ELFA 62nd Annual Convention on two panels-  AI / legal issues + AI / fraud (Phoenix, AZ). Harmony has been married for over 20 years, and she's the mother of two amazing young adults- a daughter who is a current vet student at UC Davis School of Veterinary Medicine and a son who is a current law student at UC College of the Law, San Francisco (formerly known as UC Hastings). Outside of her work as a litigator, Harmony enjoys entrepreneurship, travel, art, books, hiking, and spending time with family.​

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The above article provides information only and does not create an attorney client relationship. It should not and cannot be construed as legal advice. Need help with fraud litigation? Oswald Law Firm can help. Contact Harmony Oswald, Esq. at hno@oswaldfirm.com

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