The California legislature will wrap its 2025-2026 session on August 31, but one bill still alive in Sacramento has the state's legal AI sector watching closely. SB 574 would amend the California Business and Professions Code to add guardrails for attorneys and arbitrators using generative AI, defined in the bill as "an artificial intelligence system that can generate derived synthetic content, including text."
The bill responds to hallucinated citations in court briefings, and much of it makes practical sense. Lawyers would be required to verify accuracy, correct mistakes, and avoid putting sensitive data into consumer-grade tools. But one provision goes much further and has raised significant questions about the future of AI tools in a profession already being transformed by them.
The hard prohibition at the heart of SB 574
The sweeping rule reads: "An attorney shall not delegate the practice of law to generative artificial intelligence." Unlike other parts of the bill that allow for supervised use, this provision operates as a hard ban on delegation of the practice of law to AI - no supervision requirement, no exceptions.
The problem is that California courts have spent at least a century wrestling with what "the practice of law" actually means. In People v. Merchants Protective Corp. from 1922, the court quoted with approval an 1893 case defining the practice of law as including "legal advice and counsel and the preparation of legal instruments and contracts by which legal rights are secured although such matter may or may not be depending in a court."
Courts have repeatedly noted the lack of a clear definition since then, and the reasons become obvious with a simple hypothetical. Consider a solo transactional attorney with non-lawyer staff. Client conversations are clearly the practice of law, but what if the attorney uses intake software to avoid the initial call? What if a legal assistant handles client intake? That seems acceptable - so perhaps not all client communication is the practice of law.
Drafting, then. Paralegals routinely compose first drafts for attorney review, and legal software has drafted from templates for years. Those are accepted practice, so maybe not all drafting constitutes the practice of law either. Attorneys advise clients - that's the core function - but must advice be oral? If written, must the attorney personally draft it? That circles back to drafting.
California courts have held that document processing services do not constitute the practice of law, and that impersonal instruction on form completion may be permissible. Yet case law from over 15 years ago established that software providing automated, customized suggestions about court filings was sufficiently non-clerical to count as the practice of law.
Apply that ambiguity to the proposed legislation and the impact becomes clear. If the bill becomes law, what uses of generative AI remain for lawyers? Clerical tasks - but case law suggests the definition of clerical can be narrower than what many attorneys already delegate to staff. Research on appropriate forms would be out. Research on law itself is unclear. So is tabular review for diligence, or drafting any part of a client communication.
A constitutional question
There is also a structural issue: in the United States, lawyers are admitted to practice before courts, and courts admit and regulate them. The bar exam is a creature of the judiciary. The California Rules of Professional Conduct are issued by the Supreme Court of California, not the legislature. Whether AI regulation in the courtroom falls within attorney regulation - reserved for the state Supreme Court - or consumer protection, where the legislature may act, remains an open question.
One great promise of AI-native law firms is the idea that AI can prepare research or documents for attorney review. That function sits significantly across the line of form selection, meaning SB 574 could be an existential threat to sales and use of these tools within the most populous U.S. state.
The judicial branch has not been idle while this plays out. The State Bar issued initial guidance in November 2023 and updated it this summer. The updated guidance includes a rule-by-rule explanation exploring the nuance of using public and private AI systems, charging for work where AI use was involved, and supervising agency systems. The State Bar is doing its job of regulating lawyers and giving California practitioners guidance.
For legal professionals weighing how to integrate AI into their practice, the stakes are immediate. The bill's definition of delegation could reshape what tools are viable for everything from client intake to document drafting. Legal support staff and paralegals who increasingly rely on AI-assisted workflows would face a dramatically different operating environment if this language becomes law. Professionals tracking these developments can follow AI for Legal resources, and those in support roles may find the AI Learning Path for Paralegals useful for understanding what tools and workflows could be affected.
Why this matters for legal professionals
SB 574 is one to watch because it tests whether California can regulate AI use by attorneys without running into the judiciary's exclusive authority over the profession. If the bill passes with the delegation language intact, every California attorney using AI for anything beyond purely clerical work will need to reassess their tools and workflows. If it fails or is amended, the State Bar's updated guidance remains the operative framework. Either way, the outcome will set a precedent for how other states approach AI regulation in the legal profession.
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