Enabling Equitable Access to Trustworthy Financial Reasoning

According to the United States Internal Revenue Service, ''the average American spends $\$270$ and 13 hours filing their taxes''. Even beyond the U.S., tax filing requires complex reasoning, combining application of overlapping rules with numerical calculations. Because errors can incur costly penalties, any automated system must deliver high accuracy and auditability, making modern large language models (LLMs) poorly suited for this task. We propose an approach that integrates LLMs with a symbolic solver to calculate tax obligations. We evaluate variants of this system on the challenging StAtutory Reasoning Assessment (SARA) dataset, and include a novel method for estimating the cost of deploying such a system based on real-world penalties for tax errors. We further show how combining up-front translation of plain-text rules into formal logic programs, combined with intelligently retrieved exemplars for formal case representations, can dramatically improve performance on this task and reduce costs to well below real-world averages. Our results demonstrate the promise and economic feasibility of neuro-symbolic architectures for increasing equitable access to reliable tax assistance.

Can AI expose tax loopholes? Towards a new generation of legal policy assistants

The legislative process is the backbone of a state built on solid institutions. Yet, due to the complexity of laws -- particularly tax law -- policies may lead to inequality and social tensions. In this study, we introduce a novel prototype system designed to address the issues of tax loopholes and tax avoidance. Our hybrid solution integrates a natural language interface with a domain-specific language tailored for planning. We demonstrate on a case study how tax loopholes and avoidance schemes can be exposed. We conclude that our prototype can help enhance social welfare by systematically identifying and addressing tax gaps stemming from loopholes.

The Factuality of Large Language Models in the Legal Domain

This paper investigates the factuality of large language models (LLMs) as knowledge bases in the legal domain, in a realistic usage scenario: we allow for acceptable variations in the answer, and let the model abstain from answering when uncertain. First, we design a dataset of diverse factual questions about case law and legislation. We then use the dataset to evaluate several LLMs under different evaluation methods, including exact, alias, and fuzzy matching. Our results show that the performance improves significantly under the alias and fuzzy matching methods. Further, we explore the impact of abstaining and in-context examples, finding that both strategies enhance precision. Finally, we demonstrate that additional pre-training on legal documents, as seen with SaulLM, further improves factual precision from 63% to 81%.

Gaps or Hallucinations? Gazing into Machine-Generated Legal Analysis for Fine-grained Text Evaluations

Large Language Models (LLMs) show promise as a writing aid for professionals performing legal analyses. However, LLMs can often hallucinate in this setting, in ways difficult to recognize by non-professionals and existing text evaluation metrics. In this work, we pose the question: when can machine-generated legal analysis be evaluated as acceptable? We introduce the neutral notion of gaps, as opposed to hallucinations in a strict erroneous sense, to refer to the difference between human-written and machine-generated legal analysis. Gaps do not always equate to invalid generation. Working with legal experts, we consider the CLERC generation task proposed in Hou et al. (2024b), leading to a taxonomy, a fine-grained detector for predicting gap categories, and an annotated dataset for automatic evaluation. Our best detector achieves 67% F1 score and 80% precision on the test set. Employing this detector as an automated metric on legal analysis generated by SOTA LLMs, we find around 80% contain hallucinations of different kinds.

CLERC: A Dataset for Legal Case Retrieval and Retrieval-Augmented Analysis Generation

Legal professionals need to write analyses that rely on citations to relevant precedents, i.e., previous case decisions. Intelligent systems assisting legal professionals in writing such documents provide great benefits but are challenging to design. Such systems need to help locate, summarize, and reason over salient precedents in order to be useful. To enable systems for such tasks, we work with legal professionals to transform a large open-source legal corpus into a dataset supporting two important backbone tasks: information retrieval (IR) and retrieval-augmented generation (RAG). This dataset CLERC (Case Law Evaluation Retrieval Corpus), is constructed for training and evaluating models on their ability to (1) find corresponding citations for a given piece of legal analysis and to (2) compile the text of these citations (as well as previous context) into a cogent analysis that supports a reasoning goal. We benchmark state-of-the-art models on CLERC, showing that current approaches still struggle: GPT-4o generates analyses with the highest ROUGE F-scores but hallucinates the most, while zero-shot IR models only achieve 48.3% recall@1000.

Reframing Tax Law Entailment as Analogical Reasoning

Statutory reasoning refers to the application of legislative provisions to a series of case facts described in natural language. We re-frame statutory reasoning as an analogy task, where each instance of the analogy task involves a combination of two instances of statutory reasoning. This increases the dataset size by two orders of magnitude, and introduces an element of interpretability. We show that this task is roughly as difficult to Natural Language Processing models as the original task. Finally, we come back to statutory reasoning, solving it with a combination of a retrieval mechanism and analogy models, and showing some progress on prior comparable work.

BLT: Can Large Language Models Handle Basic Legal Text?

We find that the best publicly available LLMs like GPT-4 and PaLM 2 currently perform poorly at basic text handling required of lawyers or paralegals, such as looking up the text at a line of a witness deposition or at a subsection of a contract. We introduce a benchmark to quantify this poor performance, which casts into doubt LLMs' current reliability as-is for legal practice. Finetuning for these tasks brings an older LLM to near-perfect performance on our test set and also raises performance on a related legal task. This stark result highlights the need for more domain expertise in LLM training.

OpenAI Cribbed Our Tax Example, But Can GPT-4 Really Do Tax?

The authors explain where OpenAI got the tax law example in its livestream demonstration of GPT-4, why GPT-4 got the wrong answer, and how it fails to reliably calculate taxes.

LegalBench: A Collaboratively Built Benchmark for Measuring Legal Reasoning in Large Language Models

The advent of large language models (LLMs) and their adoption by the legal community has given rise to the question: what types of legal reasoning can LLMs perform? To enable greater study of this question, we present LegalBench: a collaboratively constructed legal reasoning benchmark consisting of 162 tasks covering six different types of legal reasoning. LegalBench was built through an interdisciplinary process, in which we collected tasks designed and hand-crafted by legal professionals. Because these subject matter experts took a leading role in construction, tasks either measure legal reasoning capabilities that are practically useful, or measure reasoning skills that lawyers find interesting. To enable cross-disciplinary conversations about LLMs in the law, we additionally show how popular legal frameworks for describing legal reasoning -- which distinguish between its many forms -- correspond to LegalBench tasks, thus giving lawyers and LLM developers a common vocabulary. This paper describes LegalBench, presents an empirical evaluation of 20 open-source and commercial LLMs, and illustrates the types of research explorations LegalBench enables.

Can GPT-3 Perform Statutory Reasoning?

Statutory reasoning is the task of reasoning with facts and statutes, which are rules written in natural language by a legislature. It is a basic legal skill. In this paper we explore the capabilities of the most capable GPT-3 model, text-davinci-003, on an established statutory-reasoning dataset called SARA. We consider a variety of approaches, including dynamic few-shot prompting, chain-of-thought prompting, and zero-shot prompting. While we achieve results with GPT-3 that are better than the previous best published results, we also identify several types of clear errors it makes. In investigating why these happen, we discover that GPT-3 has imperfect prior knowledge of the actual U.S. statutes on which SARA is based. More importantly, GPT-3 performs poorly at answering straightforward questions about simple synthetic statutes. By also posing the same questions when the synthetic statutes are written in sentence form, we find that some of GPT-3's poor performance results from difficulty in parsing the typical structure of statutes, containing subsections and paragraphs.