In our recent articles, we have discussed how AI-driven tools can assist with tackling the increasing use of AI-driven fraudulent schemes here, and how large organisations are now required to ensure appropriate fraud prevention frameworks are put in place to detect potentially fraudulent schemes here. However, even the most sophisticated fraud prevention tools can fail. How then can technology assist fraud investigations and ensure a swift and positive resolution to an otherwise distressing situation?
Data Review
Fraud investigations can involve vast amounts of data, which will require careful and detailed review. Not only is such an analysis required to identify the fraud and prevent it from occurring again in the future, but if the wrongdoer is to be identified and recovery pursued, the retained legal advisors will need to be able to quickly construct a clear and comprehensive legal case. Readers will be aware that English solicitors and barristers have strict regulatory obligations not to make allegations of fraud without sufficient evidence, and identifying that evidence early can make the difference between recovery and loss.
In these early-stage investigations, specialized, generative legal AI platforms can be hugely beneficial, allowing for the rapid assimilation and interpretation of large numbers of documents. These platforms can help identify and summarise key documents, allowing the legal advisors to quickly determine the best court of action, direct future enquiries, assess loss, and prepare a claim.
Of course, there will be instances of fraud which do not require the analysis of vast amounts of data. Nevertheless, the creative use of AI to analyse data can still provide crucial benefits, enabling a rapid response and saving costs
Disclosure
Technology has long been used when reviewing documents for the purpose of disclosure in legal proceedings. However, the process of eDiscovery has seen fundamental changes driven by the use of tech. Advanced analytics and artificial intelligence can enable fast collection and review of data, and the identification of key materials needed to evidence the fraud and the fraudster’s conduct. By leveraging AI-driven solutions, legal practitioners can manage large volumes of data more effectively, but as we discuss below significant care must be taken.
Analytics
Generative legal AI platforms are now increasingly sophisticated in scrutinizing and analysing records for red-flags, and can rapidly identify potentially suspicious communications or transactions. This can provide an invaluable tool to build a picture of the fraudster’s misconduct, allowing the legal team to demonstrate the causative link between the fraudulent event and the loss suffered.
Time (and Cost) Savings
Fraud often requires a rapid response, whether to identify the fraudster, prevent the fraud from continuing, or pursue recovery. Generative AI can help identify priority documents for consideration by the legal team, and review staggeringly large datasets in a relatively short period of time.
Where Tech Falls Short
The benefits of technology in fraud investigations are therefore writ large. Practitioners now have the ability to deploy sophisticated tools to rapidly review and analyse vast quantities of data, detecting patterns and anomalies, and helping the legal team understand what has happened and who is responsible.
But technology has its limitations and failing to recognise those limitations can prove a costly mistake
- False positives and hallucinations – Readers will be aware of the numerous stories of AI hallucinations, when a large language model generates a response that contains false or misleading information presented as fact. This can occur for a number of reasons, commonly where the legal advisor or investigator does not sufficiently train and constrain the AI model with appropriate knowledge and prompting. The consequences can be disastrous, undermining the basis on which a claim is advanced, and potentially giving rise to regulatory action against the legal advisor or investigator.
- Lack of context – AI is excellent at spotting patterns but poor at understanding context. Legal claims are nuanced, founded on precedent and ever-changing interpretations. As a result, AI frequently misapplies legal principles. Importantly, the proper application of legal principles remains the responsibility of the legal team.
- Critical thinking - AI can process large amounts of data, but it cannot assess risks, negotiate, or adapt to unique client situations or provide the bespoke and creative solutions that are often required when investigating fraud and ensuring the most appropriate steps are taken.
- Ethical judgment – AI cannot apply ethical and professional judgment.
More widely, there remains limited guidance as to how generative artificial intelligence tools can be deployed in litigation, and practitioners will be wary about inadvertently breaching their professional obligations by use of such tools: in Ayinde v London Borough of Haringey and Al-Haroun it was made clear that solicitors and barristers remain fully accountable for AI-generated content and may face regulatory sanction if they fail to verify its accuracy. However, whilst judicial confirmation of such overarching principles is helpful, the lack of detailed guidance can lead to damaging mistakes: for example, in the recent case of UK v Secretary of State for the Home Department [2026], the Upper Tribunal confirmed that uploading documents to open-source AI tools will breach confidentiality and waive legal professional privilege.
Balance
It is undoubtedly the case that technology can and is transforming the way in which fraud investigations are conducted. However, it will only do so positively if deployed correctly. Balance is vital. The sensible approach is to leverage technology with human experience and expertise, allowing the technology to bear the load of large volume data consumption and early case analytics, in turn enabling the legal advisors and investigators to apply their judgment and experience to maximise recoveries.
What’s Next?
Whilst the use of advanced technology in litigation is not new for legal practitioners, there is currently no legal or procedural playbook to govern the use of AI in legal proceedings. There are undoubtedly risks and opportunities, but there is little regulatory or judicial guidance as to what practitioners should be doing to maintain their professional obligations to the court and their clients. However, it can be anticipated that such guidance will follow soon; in February 2026 the Civil Justice Council announced that it had established a Working Group which would consult on “the question of whether [procedural] rules are needed to govern the use of AI by legal representatives for the preparation of court documents”. The CJC’s work is an important towards ensuring that, at put by Dame Vicotoria Sharp in Ayinde, the use of AI takes place “with an appropriate degree of oversight, and within a regulatory framework that ensures compliance with well-established professional and ethical standards if public confidence in the administration of justice is to be maintained.”
