Stephen McCarthy, P.A. v. United States Drug Enforcement Administration

No. 24-2704 · United States Court of Appeals for the Third Circuit · March 27, 2026 · No. 24-2704

Summary

The U.S. Court of Appeals for the Third Circuit reprimands attorney Daniel A. Pallen for submitting briefs containing inaccurate and hallucinated legal authorities generated through AI-assisted research without verifying the citations. The Court holds that his conduct violated Pennsylvania Rule of Professional Conduct 1.1 and Third Circuit Disciplinary Rule 2.1(d), but does not find a violation of Rule 3.3(a)(1). The Court imposes a reprimand and discusses the responsibilities of attorneys using nonlawyer assistance and artificial intelligence.

Court
United States Court of Appeals for the Third Circuit
Writing for the Court
Chung, Circuit Judge; Phipps, Circuit Judge; Roth, Circuit Judge
Jurisdiction
United States Court of Appeals for the Third Circuit
Decision date
March 27, 2026
Docket number
24-2704
Procedural posture
Petition for review of an order of the Drug Enforcement Administration, followed by an attorney-disciplinary proceeding concerning the briefs filed in the underlying agency-review case.
Precedential value
precedential
Parties
Stephen McCarthy, P.A. v. United States Drug Enforcement Administration
Disposition
other

Topics

sanctionsappellate procedureadministrative lawjudicial review of agency action

Practice areas

attorney disciplineprofessional responsibilitylegal ethicsappellate procedureadministrative law

Questions Presented

  1. Whether the attorney's failure to verify AI-generated legal authorities and summaries violated Pennsylvania Rule of Professional Conduct 1.1 and Third Circuit Disciplinary Rule 2.1(d).
  2. Whether the attorney violated Pennsylvania Rule of Professional Conduct 3.3(a)(1) by knowingly making or failing to correct false statements of material fact or law.
  3. What sanction was appropriate for the attorney's violations.

Holdings

  1. An attorney violates Pennsylvania Rule of Professional Conduct 1.1 when the attorney fails to exercise the thoroughness and preparation reasonably necessary for competent representation, including failing to verify legal authorities before signing and filing a brief and continuing not to verify them after being alerted to inaccuracies.
  2. The majority declined to find that the attorney violated Pennsylvania Rule of Professional Conduct 3.3(a)(1), because the record did not establish that he knowingly made or knowingly failed to correct false statements of material fact or law.
  3. A panel of the Third Circuit may impose a reprimand and other sanctions short of suspension or disbarment for attorney misconduct within the panel's disciplinary authority.

Key quotations

We conclude that Attorney’s conduct violated R.P.C. 1.1 in that he failed to exercise the “thoroughness [] necessary for the representation” in this matter. (at 8)
With proper supervision and vetting, both may be helpful to an attorney. (at 13)

Factual background

Attorney Daniel A. Pallen submitted an appellate brief relying on eight DEA adjudications whose summaries and citations were generated by AI and provided by a non-attorney. He modified and incorporated the material without checking whether the authorities existed or whether the summaries were accurate; seven summaries contained substantial inaccuracies and one authority was nonexistent. After the Government identified the problems, Pallen still failed to verify or correct the citations and instead characterized the errors as immaterial. He did not investigate or disclose the inaccuracies until ordered by the Court.

Procedural history

Attorney Daniel A. Pallen represented the petitioner in the underlying petition for review. He filed an opening brief containing summaries of eight DEA adjudications based on AI-generated material supplied by a non-attorney, without verifying the authorities; seven summaries were inaccurate and one cited authority did not exist. After the Government identified the errors, Pallen filed a reply brief characterizing them as immaterial, and the Court later ordered him to produce the authorities and show cause why he should not be sanctioned. Following a show-cause response and hearing, the Court found violations of Pennsylvania Rule of Professional Conduct 1.1 and Third Circuit Disciplinary Rule 2.1(d), and reprimanded him.

Court Document

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