A Chicago federal court is now the stage for what legal observers are calling a landmark test of artificial intelligence's boundaries in the practice of law. Nippon Life Insurance Company of America filed suit on March 4 against OpenAI Foundation and OpenAI Group PBC, alleging that ChatGPT functioned as an unlicensed attorney when it guided a former disability claimant through a series of legal maneuvers after her case had been settled and dismissed with prejudice.

According to the complaint filed in the U.S. District Court for the Northern District of Illinois, the claimant — Graciela Dela Torre, an employee of a logistics firm insured through Nippon — uploaded correspondence from her former lawyer into ChatGPT in 2024. The chatbot allegedly validated her concerns, encouraged her to fire her attorney, and helped her pursue reopening a case that had already been resolved. After a judge denied that bid in February 2025, ChatGPT is alleged to have drafted a new lawsuit and dozens of subsequent motions and notices that Nippon contends had "no legitimate legal or procedural purpose."

The insurer's claims include tortious interference with contract, abuse of process, and — most notably — violation of Illinois's unauthorized practice of law statute. "ChatGPT is not an attorney," the complaint states bluntly, adding that despite OpenAI's widely publicized demonstrations of ChatGPT passing bar examinations, the platform "has not been admitted to practice law in the State of Illinois or in any other jurisdiction within the United States." OpenAI responded that "this complaint lacks any merit whatsoever."

The lawsuit marks a significant escalation in AI-related legal liability. Prior litigation against AI companies has largely centered on copyright, privacy, and defamation claims. A lawsuit targeting an AI developer for the unauthorized practice of law through a consumer-facing product breaks new ground, raising questions that bar associations and courts have only begun to address: at what point does an AI tool cross from providing information into providing legal counsel?

The timing is notable. A bill advancing through New York's legislature would explicitly prohibit AI chatbots from giving substantive legal advice — or advice in any other licensed profession — and would create a private right of action for users harmed by such conduct. The bill's sponsor, State Senator Kristen Gonzalez, noted that current law contains no explicit prohibition on a large language model representing itself as a lawyer and dispensing legal advice accordingly. The measure, which cleared the Senate's Internet and Technology Committee in February, would also prevent platforms from shielding themselves behind a disclosure that users are interacting with a "non-human chatbot."

For legal departments and law firms, the case reinforces a familiar but urgent message. Courts have already sanctioned lawyers for submitting AI-generated briefs containing hallucinated citations; now the liability exposure extends upstream to the developers of the tools themselves. OpenAI amended its usage policies in October 2024 to bar users from seeking legal advice via the platform — a change Nippon argues came too late and underscores that the risks were foreseeable. Whether that policy change will carry legal weight is among the questions the Northern District of Illinois may ultimately have to answer.

The case is Nippon Life Insurance Company of America v. OpenAI Foundation and OpenAI Group PBC, No. 1:26-cv-02448 (N.D. Ill.).