No need to ban AI from handling legal disputes. Unless you're representing yourself you need a lawyer and there's no way for an AI to act as a lawyer.
So an AI can do the work but the person handling the dispute needs to sign off on it. If the AI screws up and the lawyer doesn't catch it then the lawyer's on the hook. I don't see any need to change this.
and subpoenaed the officer to make sure he showed up in court for the hearing so that they could actually have oral argument.
The best way to avoid such a ticket is to show up to court and hope the officer doesn't show up. And the AI firm went outs of way to make sure the officer showed up. That's legal malpractice right there. (In the end, IIRC, the judge heard about the firm's involvement and put the kibosh on the entire thing.)