> only broken for encryption

It's broken in an adversarial situation: given the hash of evidence-file A, it's possible to construct a file B that gives the same hash.

But it would be a different matter entirely to construct a file B that actually looked like a file of evidence relevant to the case. I don't know how lawyers use these hashes, but unless they're being used to detect malicious tampering, I don't see what's wrong with MD5. And since the files to be hashed are evidence, they're in the custody of a court; things have got quite bad if court officials might be tampering with evidence.