Nippon Life Insurance Company of America filed a federal lawsuit in Chicago on Wednesday against OpenAI, claiming that ChatGPT engaged in the unauthorized practice of law in Illinois by advising a former disability claimant to reopen a benefits lawsuit that had already been settled with prejudice and formally dismissed in January 2024. According to the complaint, the woman uploaded an email from her former attorney into ChatGPT, which she says validated her concerns about the legal advice she had received. She then fired her attorney and used ChatGPT to draft and file a series of motions, notices, and legal documents attempting to reopen the closed case, documents that a federal judge rejected in February 2025 and that Nippon claims served “no legitimate legal or procedural purpose.” Nippon is seeking $300,000 in compensatory damages and $10 million in punitive damages, as well as a court declaration that OpenAI violated Illinois’ unauthorized practice of law statute.

The lawsuit centers on a timing argument that will define its legal significance. OpenAI revised its terms of service in October 2025 to explicitly prohibit users from seeking legal advice through ChatGPT. But the events described in the complaint, the settlement reopening attempt, the ChatGPT-drafted filings, and the court’s rejection of those filings, all occurred before that policy change was implemented. Nippon argues that OpenAI’s own retroactive policy revision is an implicit acknowledgment that the platform was being used for unauthorized legal practice during the period in question and that the company bore responsibility for the consequences while those guardrails were absent. The case is filed as Nippon Life Insurance Company of America v. OpenAI Foundation and OpenAI PBC, No. 1:26-cv-02448 in the US District Court for the Northern District of Illinois.

Legal scholars are already flagging this as one of the first cases to directly test whether an AI developer can be held liable under state unauthorized practice of law statutes for outputs generated by a consumer-facing chatbot. Previous AI legal liability cases, including the Raine v. OpenAI case in California arguing ChatGPT engaged in unlicensed psychotherapy, and multiple federal court sanctions against attorneys who submitted ChatGPT-hallucinated case citations, have established that the AI legal liability landscape is rapidly evolving. New York State Senate Bill S7263, introduced just this week, would specifically prohibit AI chatbots from impersonating licensed professionals or offering licensed-professional advice, a legislative development that will now be watched in direct parallel with this lawsuit’s progression. Neither OpenAI nor Nippon’s attorneys at Sidley Austin immediately responded to requests for comment.

BREAKING: OpenAI Just Got Sued for $10 Million for Practicing Law Without a License, After ChatGPT Helped a Woman Reopen a Settled Case