New York Litigation: An Overview

On the commercial front, 2025 saw the continued evolution and expansion of technology and artificial intelligence (AI) in New York State court practice, with the potential for both great benefits and serious pitfalls as discussed in detail below. On the criminal practice front, the Southern District of New York continued to prioritise quick resolutions and incentivise voluntary self-disclosure and restitution for corporate wrongdoers. Finally, this article examines a significant development in New York labour law with recent amendments to the state’s pay frequency law.

Trends and Developments in Commercial Litigation

The benefits and pitfalls of AI continue to dominate the headlines in New York State commercial litigation practice. As discussed below, AI can serve as a powerful resource in both litigation and arbitration. It has the potential to provide substantial cost savings for clients in both legal research and electronic discovery and can also be a useful tool to streamline arbitration proceedings. At the same time, the New York courts have repeatedly cautioned that its undiscerning use poses serious risks not only to attorneys and litigants but also to the effective administration of justice. Thus, AI should be regarded as an aid to, not a replacement for, sound professional judgement.

AI as a useful tool in litigation

Commercial litigators know how time-intensive our work can be. Tasks such as document review, citation checks for lengthy briefs, investigation of an adversary’s litigation history, and research of intricate legal issues often require significant time and attention. These essential steps in effective advocacy can also translate into high costs for clients.

Attorneys can meet these challenges by leveraging AI tools to streamline these routine tasks, significantly reducing the time and effort required for work that might otherwise be all-consuming. This not only lowers clients’ costs but also affords attorneys more time to devote to higher-value strategic work.

Currently, online legal databases such as Westlaw and Nexis have integrated AI to assist with legal research, claim identification and analysis, and drafting of motions and briefs. Other litigation tools, such as e-Discovery platforms, have also adopted AI technologies with functionalities that include identifying and redacting sensitive information, flagging relevant or responsive documents, and detecting patterns to facilitate automated coding.

According to Thomson Reuters, these advancements can save lawyers nearly 240 hours annually. This time can be reallocated to other important activities, such as strengthening client relationships, thereby promoting competent and thoughtful representation throughout the entire litigation process.

The use of AI in ADR

Alternative dispute resolution (ADR) has gained prominence in New York State court practice with New York State’s Presumptive ADR Initiative and the Commercial Division’s adoption of several ADR-related rules and rule amendments requiring parties to submit to ADR in their commercial cases.

As demand for neutral facilitators increases, AI-driven tools offer the potential to support ADR processes and alleviate pressure on the court system. Organisations such as the American Arbitration Association–International Centre for Dispute Resolution (AAA-ICDR) are actively encouraging arbitrators to adopt AI to analyse parties’ arguments, identify areas requiring further inquiry, and predict settlement values based on analogous past trial verdicts and settlements.

Counsel can expect AI to play a greater role in supporting dispute resolution. While AI offers valuable analytical tools, it cannot replace the judgement, experience, and empathy that seasoned mediators and arbitrators bring to complex commercial disputes. The most effective approach will likely combine AI’s analytical capabilities with seasoned neutrals’ insights to ensure accurate and fair outcomes.

The downsides of AI and a warning to practitioners

Unfortunately, a growing number of attorneys are placing unwarranted trust in artificial intelligence, with serious consequences for both counsel and their clients.

Several recent decisions from New York State courts have addressed attorneys’ reliance on nonexistent cases and on propositions allegedly supported by these fabricated authorities. In one recent matter, the court admonished an attorney for submitting a summary judgment motion predicated on fictitious case law. The issue came to light when the opposing party demonstrated in its opposition brief that the cited authority did not exist. The attorney who filed the motion subsequently acknowledged that he had relied on AI-generated research and failed to verify the accuracy of the citation. The court denied the request to withdraw the motion, dismissed it with prejudice, and imposed sanctions, finding that his conduct was “frivolous” and a waste of judicial resources.

In an even more troubling case, an attorney defending a matter was reprimanded for including in his summary judgment submission cases that did not support the propositions for which they were cited, were entirely unrelated in subject matter, and, in one instance, did not exist at all. In response to what was plainly an AI-generated brief, plaintiff’s counsel moved for sanctions. Shockingly, defendants then filed an opposition to the sanctions motion that contained additional fabricated citations and quotations. Although the evidence overwhelmingly showed that the opposition was AI-generated, defence counsel initially denied using unvetted AI. However, after questioning by the court, he admitted that he had relied on AI in both the summary judgment brief and the opposition papers. He stated that he was “extremely embarrassed and humiliated” and conceded that his conduct was “obviously sanctionable”.

In that case, the court not only awarded plaintiff the costs and out-of-pocket expenses incurred as a result of the delay in adjudicating the summary judgment motion, imposing those sanctions jointly and severally against both defendants and their counsel, but also directed plaintiff’s counsel to submit a copy of the decision to the Grievance Committee of the Appellate Division, First Department.

These are merely two examples of attorney misconduct stemming from the use of unvetted AI. Numerous additional New York State court decisions have sanctioned attorneys for similar behaviour, to the detriment of counsel’s reputation before the court, their relationships with clients, and ultimately the clients’ substantive interests in litigation.

Going forward, attorneys who use AI tools in litigation must adhere to their duties of candour and competent representation. Relying on AI without verifying its research, findings, and analysis is a mistake with potentially severe consequences, not only for attorneys but also for clients who rely on them to litigate matters honestly and in the clients’ best interests. Attorneys must ensure that every case they cite not only exists but also supports the cited proposition and can withstand scrutiny in a court of law.

In addition to exercising their own professional judgement when using AI, attorneys seeking further guidance may consult New York State’s Interim Policy on the Use of Artificial Intelligence, issued on 10 October 2025. While not binding for attorneys, as it governs the use of AI by all judges and nonjudicial employees of the New York State Unified Court System, the policy offers meaningful insight into the risks associated with AI technologies, including potential breaches of confidentiality and ethical violations. It also includes an appendix identifying court-approved generative AI products. Attorneys would be well advised to review this list to ensure that any AI tools they employ align with the court system’s internal standards.

Trends and Developments in Criminal Defence and Investigations

SDNY continues trend of prioritising quick resolutions and restitution to victims over guilty pleas and punishments for corporate wrongdoers

On 2 December 2025, Jay Clayton, the United States Attorney for the Southern District of New York (SDNY), discussed his desire to see an increase in voluntary self-disclosure of wrongdoing by corporations, co-operation with the government by those corporations, and quicker restitution awards to victims. In his remarks, Clayton advocated for a system in which companies that promptly self-disclose misconduct, assist prosecutors in their investigation, and quickly compensate victims are rewarded with “real benefits”, including no penalty and the ability to comprehensively resolve potential liability across multiple government agencies. Clayton’s vision expands on corporate resolution policies implemented by the Department of Justice (DOJ) under the Trump Administration and Clayton’s SDNY predecessor during the Biden Administration.

Corporate enforcement policies

Corporate enforcement policies have long been focused on prosecution and criminal penalties for corporate misconduct, sometimes at the expense of timely reimbursement to victims. In recent years, however, the DOJ and its US Attorney’s Office components have sought to incentivise early, voluntary disclosure of corporate wrongdoing.

In February 2023, the Attorney General’s Advisory Committee, led by then-US Attorney for SDNY Damian Williams, announced the implementation of the US Attorney’s Offices’ Voluntary Self-Disclosure Policy (the “VSD Policy”). The VSD Policy was designed to encourage corporate accountability and standardise how voluntary self-disclosures are defined and treated nationwide across different offices, providing more predictability for companies and their counsel in navigating instances of corporate wrongdoing. Under the VSD Policy, companies that voluntarily self-disclosed misconduct before it was publicly reported or otherwise known to the DOJ and fully co-operated and timely remediated the criminal conduct would be eligible, in the absence of aggravating factors, for significant benefits, including no guilty plea, lower monetary penalties, and the absence of a corporate monitor.

Following Donald Trump’s election, the DOJ in May 2025 announced a revised Corporate Enforcement Policy (the “2025 Policy”) that offered even greater benefits to companies that voluntarily self-disclose misconduct. Under the 2025 Policy, the DOJ announced that it would decline to prosecute a company that met the same criteria set forth in the VSD Policy. For purposes of the 2025 Policy, a company is considered to have made a voluntary self-disclosure where the company promptly reports the misconduct to the Criminal Division after uncovering it, before “an imminent threat of disclosure or government investigation”, where it has no prior obligation to disclose, and before the Department of Justice already knows of the misconduct. (US Department of Justice, 9-47.120 – Criminal Division Corporate Enforcement and Voluntary Self-Disclosure Policy, Appendix B).

In addition, the 2025 Policy provides benefits to a company that does not qualify for declination. For example, when a company’s self-reporting of misconduct does not meet the definition of self-disclosure or where aggravating factors exist that warrant a criminal resolution, the DOJ has committed to (i) providing such companies with a non-prosecution agreement lasting less than three years, (ii) not imposing a corporate monitor and (iii) greatly reducing the applicable fine range. Finally, even when companies fail to qualify for declination or non-prosecution because they do not meet the stated criteria, prosecutors under the 2025 Policy maintain discretion to tailor appropriate resolutions under which companies can still receive certain benefits.

Clayton’s recent remarks have not been formalised in any official SDNY policy, but two themes can be gleaned from Clayton’s vision for addressing corporate misconduct. The first is speed. Clayton emphasised that any increased benefits to companies require both timely co-operation with the government and compensation to victims. Thus, companies that immediately self-disclose misconduct, even before their own internal investigation has concluded, can receive an early deferred prosecution agreement with the potential to receive greater benefits through continued co-operation with the government’s investigation. The second is uniformity and consistency, with a “whole-of-government” approach to corporate resolutions that allows companies to resolve their liability with multiple government agencies at the same time.

Application for criminal defence practitioners and corporate counsel

The DOJ’s 2025 Policy and Clayton’s vision for the SDNY’s own disclosure policy present new opportunities and potential dangers to both corporate counsel and the criminal defense bar.

Whereas the VSD Policy offered companies a path to less severe penalties by self-reporting misconduct, companies now stand to benefit even more under the friendlier, pro-business approach implemented under the Trump Administration. The possibility of declinations and non-prosecution agreements, along with significantly reduced fines and no corporate monitorships, should be attractive incentives for companies looking to avoid long and costly engagements with DOJ prosecutors. Companies, however, will need to ensure they have robust compliance and internal audit procedures in place to detect misconduct in time to reap the benefits of the policies. Indeed, with the implementation of individual whistle-blower policies like the SDNY’s Individual Voluntary Self-Disclosure Program, it is even more critical that companies identify wrongdoing in a timely fashion to ensure they alert the DOJ before an employee does. At the same time, however, companies and their counsel will need to assess the risks of early engagement with the government, especially when the extent of the wrongdoing may not yet be fully known.

Trends and Developments in Employment Litigation

2025 saw a key development in labour law litigation with the passage of amendments (the “Amendments”) to the New York Labor Law pay frequency provisions. For years, courts have been overburdened with class actions asserting “pay frequency” claims, where workers seek damages for wages that were paid late. The Amendments, which resolved a split between the First and Second Departments discussed below, promise to decimate such class litigation. While the Amendments are cause for celebration among employers, compliance remains a paramount concern. Class actions may be reduced, but individuals continue to file wage and hour cases, and the Department of Labor continues to vigorously enforce the labour laws.

Evolving interpretation of New York’s Pay Frequency Law

New York’s pay frequency law requires employers to pay “manual workers” on a weekly basis. The Department of Labor has long interpreted the term to include employees who spend more than 25% of their working time engaged in physical labour. The question for the courts was whether employees had a private right of action to enforce the pay frequency law. The analysis of that issue led to a dramatic split between the First and Second Departments, a split that ultimately pushed the legislature to enact the Amendments. 

In 2019, the Appellate Division, First Department, held in Vega v CM & Associates Construction Management, LLC, 107 N.Y.S.3d 286 (1st Dep’t 2019) that manual workers had a private right of action under the pay frequency law and could recover liquidated damages equal to the wages that were paid late, in addition to attorneys’ fees under Section 198(a-1). Class actions soon followed.

In 2024, the Second Department disagreed with the First Department. In Grant v Global Aircraft Dispatch, 204 N.Y.S.3d 117 (2d Dep’t 2024), the Second Department held that no private right of action exists when employees receive all of their wages on a biweekly, rather than weekly, basis.

Thus, at the end of 2024, exposure to pay frequency class actions depended entirely on geography, with employers in the First Department facing significant risk while those in the Second Department did not.

The Amendments

The Amendments, enacted into law in 2025, changed the landscape in the First Department.

The Amendments provide that liquidated damages are unavailable when employers pay manual workers on a regular schedule that is at least bi-weekly. Damages for a first violation are limited to the amount of lost interest, calculated daily using New York’s 16% statutory interest rate. Liquidated damages equal to 100% of the late-paid wages now apply only when an employer has a prior final court order finding a pay frequency violation for the same type of work. Attorneys’ fees remain available, and employers who fail to pay manual workers at least semi-monthly are still liable for liquidated damages.

The future

While the Amendments promise to eliminate pay frequency class cases, they leave unanswered several questions about pay frequency litigation. For example, the pay frequency statute applies to “manual workers”, defined as a “mechanic, workingman or laborer”. Courts have wrestled with this vague definition, and they will continue to do so after the Amendments. Furthermore, the Amendments do not resolve the private right of action question. The Court of Appeals has agreed to take up the issue. Yankwitt LLP will continue to monitor the case as it develops.