Artificial intelligence is quickly changing how legal work is researched, drafted, reviewed, and delivered. But while AI can improve efficiency, it also creates serious risks, including inaccurate analysis, fabricated citations, and potential court sanctions. In this webinar, Certum Group brings together legal and business experts to discuss how lawyers can use AI to strengthen their work without compromising accuracy, professional judgment, or accountability.
Artificial intelligence is transforming all corners of the economy, and the legal profession is no different. At first it seemed the stories about AI and the law were all negative, as many lawyers , even those at some of the most prestigious firms , found themselves sanctioned for filing briefs with hallucinated cases. More recently, the news cycle has turned, as existing law firms embrace AI and new firms sprout to deliver AI-first legal services. Just recently, top lawyers from Kirkland & Ellis and Quinn Emanuel each left to launch their own law firms. Meanwhile, Kirkland, the AmLaw 1 firm, announced it would invest $500 million to develop its own proprietary AI system. [ Click here to read a Bloomberg article by Certum’s Will Marra on what Kirkland’s AI announcement means for the future of third-party legal finance.] This can be dizzying for many lawyers. Clients want them to use artificial intelligence. Competitor law firms are using AI. But the risks of misusing AI are high and can even include sanctions and media coverage that gives lie to the old adage that “all news is good news.” A Transformative New Tool To help lawyers navigate this landscape, Certum Group recently hosted a webinar to help lawyers navigate the landscape. Our featured speaker was Michael Showalter , founder of Showalter PLLC, a litigation firm built around AI tools, and a former appellate lawyer at Gibson Dunn and Wiley Rein. The conversation was led by Suneal Bedi , Certum’s Scholar in Residence who is a professor at Indiana University’s Kelley School of Business. This was the first in a series of conversations that Professor Bedi will lead designed to help Certum’s clients navigate the toughest challenges they face today. In the webinar, Showalter demonstrated the power of AI by sharing several moments that “blew his mind” over the past year: A first draft of a law review article that was better than what he’d get from most junior lawyers. T urning a project that once took 100–150 hours into roughly only 15. A flawless table of authorities, table of contents, and cite-check on a brief, produced in about ten minutes. He noted he’d never once received a flawless table of authorities from a human paralegal. Sophisticated legal reasoning; identifying an overlooked antecedent argument in a forthcoming Yale Law Journal article showing the tools do real analysis, not just “automatable” formulaic work. He now estimates he accomplishes in a single day what would have taken him 40 hours of work back in 2022. Three key takeaways emerged from the webinar. To Be a Good Lawyer With AI, First Be a Good Lawyer AI cannot replace legal judgment, but it can amplify it. Lawyers should not outsource the job of lawyers to an AI model. They should treat the models instead like highly capable but error-prone junior associates. This means they should ensure the model has sufficient context about the legal issue they’re asking it to address. And you should give senior-lawyer leadership and oversight to its work. You should also treat AI errors as inevitable, the same way junior lawyers will inevitably make mistakes. Be vigilant to when the model gets something wrong, fix the error, and do what you can to avoid the error from recurring in the future. And you should iterate constantly. AI workflows cannot be completed in a single prompt. Lawyers should consistently redline and comment on the AI’s outputs to refine and perfect the work product. Guard Against Hallucinations and Errors Lawyers are rightly concerned about the prospect that AI may rely on fabricated cases. The webinar offered some candid commentary on this issue: First, the technology has changed dramatically between 2024 and 2026. The incidence of hallucinated and fabricated cases is much rarer today than in the past, partly because the frontier labs have focused on addressing this problem. Second, verification tools now exist. Tools like Veritas now exist to compare every quote in a brief against its primary source, catching errors rather than predicting text. Third, senior oversight remains non-negotiable. Lawyers should not assume an AI will accurately describe a case any more than they should assume a junior associate will do so. Lawyers should read and review every case they cite for accuracy and reliability. Meet Your Clients’ Expectations and the Courts’ Requirements Finally, it is clear that the market is shifting towards the expectation that lawyers will use AI. Even the most sophisticated clients are now demanding that their clients use AI. And they are relying on the existence of AI to push down rates and demand that simpler tasks get outsourced to artificial intelligence. For example, Sebastian Niles, the President and Chief Legal Officer of Salesforce, recently published an article arguing that the integration of AI into law firms should be a baseline expectation. [Harvey AI’s CEO, Winston Weinberg, was recently the keynote speaker at an NYU Law School conference co-organized by Professor Bedi and Certum’s Will Marra. Click here to learn more about the takeaways from that conference.] At the same time, courts have stepped in to closely police how law firms are using AI. Some courts are even amending local rules to regulate the use of AI in legal filings. To be a great lawyer today and tomorrow, lawyers need to stay on the cutting edge of artificial intelligence. Clients demand it, and courts do too. Lawyers should continue to educate themselves about how to best use AI to improve and amplify their work, but not to replace it.
Following up on the release of Certum Group’s Trade Secret Guide, the post below is the first in a series on recent appellate court trade secret decisions. These posts will examine groundbreaking decisions and their ramifications. Today’s post features the May 2026 decision in Versata Software, LLC v. Ford Motor Co., in which the Federal Circuit vacated and reversed key portions of the trial court’s damages rulings, holding that a plaintiff whose trade secret has been misappropriated can seek, as unjust enrichment damages, the value of the benefit that the defendant received, even if that amount is substantially more than the defendant would have paid for the trade secret. The case is now remanded for a new trial on trade secret misappropriation damages. Background: In the early 2000s, Ford hired Versata Software, LLC (“Versata”) to develop computer software that would allow Ford to more efficiently enable vehicle configuration. Versata created two pieces of software: the Automotive Configuration Manager (“ACM”) and the Materials Cost Analytics (“MCA”). The deal was memorialized in a 2004 Master Subscription and Services Agreement (“MSSA”) as well as a separate but related agreement for Versata to provide additional support and services for the software. After 10 years, with the MSSA set to expire, the parties were unable to agree on an extension; instead, Ford “released its own manufacturing configuration software, called PDO, which Ford had developed while licensing software from Versata.”¹ Versata believed that Ford’s creation of PDO involved the misappropriation of its trade secrets and was done in violation of the parties’ agreements. After Ford filed a declaratory-judgment action against Versata,² Versata counterclaimed, alleging that Ford had misappropriated both ACM and MCA. During pre-trial proceedings, the district court severely curtailed Versata’s ability to establish damages by, among other things: Excluding the testimony of Versata’s damages expert; Limiting Versata’s trade secret damages to a “reasonable royalty model of damages that is based upon the parties’ relevant business history”³; and Precluding Versata from seeking damages “based upon the alleged value of benefits obtained by Ford through its use of the relevant software.”⁴ Despite these draconian limitations, at an October 2022 jury trial, the jury found that Ford breached the MSSA and misappropriated three ACM trade secrets. Accordingly, the jury awarded Versata approximately $22 million for trade secret misappropriation (based on the parties’ licensing history) and approximately $82 million for breaching the MSSA.⁵ In post-trial briefing, Ford moved for JMOL on liability and damages. In response, the district court upheld the jury’s verdict that found Ford liable for trade secret misappropriation and breach of contract, but ultimately (i) reduced the trade secret damages to $0 (“the jury had no way to reliably determine how long it would have taken Ford to develop the three (out of four) trade secrets that it found to have been misappropriated”) and (ii) reduced the breach-of-contract damages from approximately $82 million to $3 (“because the jury had no way to calculate Versata’s claimed breach of contract damages with reasonable certainty”).⁶ In other words, the district court first precluded Versata from seeking significant unjust enrichment damages and then, when Versata prevailed on a more limited damages theory, the district court struck them. Versata timely appealed. The Federal Circuit Finds that DTSA Windfalls Are Just Fine In excluding Versata’s damages expert, the district court reasoned that his unjust enrichment model, based on the value to Ford of misusing the trade secrets, “would award Versata far more than the fair price it deemed Ford should pay in exchange for the software’s benefits” and “confer upon Versata a huge and undeserved windfall.”⁷ While this might have been a bug to the district court, to the Federal Circuit it was a feature of the Defend Trade Secrets Act (“DTSA”). The Federal Circuit, applying Sixth Circuit law, found that the district court was wrong to concern itself with a possible Versata “windfall” based on Ford’s significant misappropriation-driven savings. Indeed, the Federal Circuit noted that this category of damages is found directly in the DTSA’s text, which explicitly allows a court to award “damages for any unjust enrichment caused by the misappropriation of the trade secret that is not addressed in computing damages for actual loss.”⁸ The Federal Circuit found a 2008 Tenth Circuit Case, Russo v. Ballard Medical Products, particularly instructive.⁹ There, the court acknowledged that “although unjust enrichment damages ‘put [the plaintiff] in a much better position than if he had entered a licensing agreement … under Utah law, [defendant], as the party that acted wrongfully, must assume the risk it took by misappropriating rather than licensing [the trade secret].’”¹⁰ In other words, corporate actors should play by the rules; if not, they might learn that trade secret damages awards can dwarf the cost they could have paid. Because the district court’s decision to limit Versata’s damages theories to those based solely on the parties’ licensing history was error, the Federal Circuit found that Versata was effectively hamstrung at trial and during post-trial proceedings. Accordingly, the Federal Circuit partially vacated the trial court’s decision to zero out the trade secret damages award and remanded for a new trial on trade secret misappropriation damages.¹¹ Versata’s Contract Damages Were Proper and Should Be Reinstated Under Michigan law, damages for a breach of contract claim must be measured with “reasonable certainty,”¹² but “mathematical certainty” is not required.¹³ When a jury issues a contractual damages award, such award “must stand unless it is (1) beyond the range supportable by proof; or (2) so excessive as to shock the conscience; or (3) the result of a mistake.”¹⁴ The district court concluded that Versata’s approximately $82 million in contract damages could not stand because Versata had purportedly failed to present any evidence to aid the jury in this calculation.¹⁵ The Federal Circuit disagreed. Simply put, the Federal Circuit found that Versata met its burden. Specifically, at trial, Versata’s counsel presented three base damages amounts based on the parties’ licensing history: (1) $17 million (based on the amount Versata offered to license its software after the initial deal expired); (2) $14.95 million (the amount Ford paid Versata in the final year of the contract); and (3) $10.95 million (the base license fee under the MSSA, which amount did not include service and/or maintenance). Versata’s counsel told the jury to multiply any of those figures by 7.5 years, which represented “the period from the start of Ford’s misappropriation through trial.”¹⁶ The ultimate damages award of $82,260,000 reflected $10.97 million for each of the 7.5 years that Ford breached the MSSA. Because this damages figure was neither “beyond the range supported by proof,” nor “so excessive as to shock the conscience,” the Federal Circuit ordered it reinstated. Ramifications Versata’s win, led by Jeffrey Lamken of MoloLamken, is a shot in the arm for trade secret plaintiffs. A plaintiff’s ability to win substantial unjust enrichment damages, i.e., “damages for any unjust enrichment caused by the misappropriation of the trade secret that is not addressed in computing damages for actual loss,” is a driving factor in bringing a trade secret misappropriation claim. Limiting those damages to only “royalties-based damages models” would handcuff plaintiffs and turn trade secret damages into contract damages, in direct contravention of the DTSA. This decision should put corporate defendants on notice to think twice before stealing trade secrets. _ ¹ Op. at 3. ² Ford initially sued Versata, seeking a declaratory judgment that it had not infringed upon Versata’s IP or misappropriated Versata’s trade secrets. In response, Versata counterclaimed, alleging trade secret misappropriation and breach of contract. ³ Op. at 4. ⁴ Id. ⁵ Id. at 5. ⁶ Id. at 5-6. ⁷ Op. at 4. ⁸ Op. at 7 (quoting 18 U.S.C. § 1836(b)(3)(B)(i)-(ii)). The court noted that the Michigan Unfair Trade Secrets Act (“MUTSA”) ⁹ 550 F.3d 1004, 1020 (10th Cir. 2008). The Russo court was interpreting the Utah Trade Secrets Act, “which includes the same language as the DTSA and MUTSA.” Id. at 1021. ¹⁰ Op. at 8-9. ¹¹ Op. at 11-12. ¹² Doe v. Henry Ford Health Sys.¸865 N.W.2d 915, 922 (Mich. App. 2014). ¹³ Chelsea Inv. Grp., LLC v. Chelsea, 792 N.W.2d 781, 792 (Mich. App. 2010). ¹⁴ Advance Sign Grp., LLC v. Optec Displays, Inc., 722 F.3d 778, 787 (6th Cir. 2013). ¹⁵ Op. at 13. ¹⁶ Id.