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California bar exam’s AI fallout: $6 million in unplanned costs

By Sowjanya Pedada

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    May 19, 2025 (LAPost.com) — The State Bar of California’s effort to reduce costs by incorporating artificial intelligence into its bar exam process has backfired dramatically. According to Reuters, this could result in nearly $6 million of unexpected expenses, intensifying the organization’s already troubling financial position.

The attempt to replace national bar exam materials with a state-developed version using AI-generated questions has sparked legal action, operational overhauls, and public outcry.

In February 2025, the State Bar launched a new California bar exam designed with help from a private contractor using AI to generate multiple-choice questions. However, the exam rollout was marred by widespread technical breakdowns. Candidates faced login delays exceeding an hour and a half, software crashes, and a lack of basic exam functionalities such as spell check and copy-paste—issues that deeply disrupted thousands of examinees.

What caused greater concern was the revelation that 23 out of 200 multiple-choice questions were created using AI tools, information the State Bar had not disclosed in advance to the California Supreme Court.

Instead of saving money, the exam debacle has forced the State Bar to shoulder significant unanticipated costs. It lost around $3 million by waiving fees for test-takers affected by the technical issues. Another $2 million was allocated to revert to traditional in-person testing for the July 2025 exam.

An additional $620,000 will be spent to reinstate the Multistate Bar Examination, and the State Bar also agreed to a $6.1 million payout to terminate its unused five-year contract with Kaplan, according to Reuters.

Amid the fallout, the Bar filed a lawsuit against Meazure Learning, the vendor that oversaw the online exam’s administration. The suit accuses the company of misrepresenting its technical readiness, breaching contractual obligations, and withholding critical post-exam performance data. According to the SFGate report, the Bar alleges that Meazure failed to fix known bugs and concealed problems in its software which ultimately caused major exam disruptions.

The controversy prompted a swift reaction from lawmakers. State Senator Thomas Umberg proposed legislation mandating an independent audit of the State Bar’s exam administration. He expressed concern that the agency lacked the governance and technological expertise to make consequential changes without external checks.

To mitigate the impact on February test-takers, the State Bar formally requested that the California Supreme Court lower the minimum passing score for the exam cycle. It also proposed options such as provisional licensure to ensure applicants were not unfairly penalized for issues beyond their control.

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