Can Legal AI Know When It Is Wrong? And Do Students Know When It Is?

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arXiv:2608.21089v1 Announce Type: new Abstract: Integrating Large Language Models (LLMs) into the Indian judiciary promises access to justice but introduces severe risks. We identify the 'inertia of confidence'--an overconfidence phenomenon analogous to the Dunning-Kruger effect where LLMs provide incorrect legal verdicts with near-maximum confidence, driven by a hypothesized 'precedent overfitting' bias. Phase I of our socio-technical audit tested ChatGPT (GPT-5.2), Meta AI, and Perplexity AI on a 60-case battery regarding the Indian Contract Act, 1872, and the shift toward statutory enforcement of specific performance. We introduce the High-Confidence Error Rate (HCER) to quantify incorrect verdicts delivered with dangerous certainty (>= 9 on a 1-10 scale). All models struggled with statutory updates. Meta AI proved most vulnerable (31.7% HCER), frequently misapplying pre-amendment rules with a 9.1/10 mean confidence, followed by Perplexity (15.0%) and ChatGPT (6.7%). Phase II investigated human vulnerability to this overconfidence via a survey of Indian law students (N=380). Verification often functions as a reactive adaptation to machine hallucinations: students encountering fabricated citations reported higher verification scores (4.2/5) than those with no such encounters (2.8/5). Furthermore, while 81.6% knew submitting hallucinated cases can lead to contempt-of-court, 71.1% received no formal training on ethical AI use. We propose shifting toward adversarial legal research pedagogy and implementing source-grounded verification architectures to prevent systemic …

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