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Regulation

AB 2305 — Corporate Legal Funder Unauthorized Practice

Full name
An act relating to attorneys: corporate legal funders
Citation
AB 2305 (2025-2026 Reg. Sess.), approved Sept. 20, 2026
Jurisdiction
Cal.
In force
2027-01-01
Text
leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202520260AB2305
Stories
2
Legal professionLitigation finance
CAL.Regulation

California makes litigation-funder control of cases unauthorized practice of law

Governor Newsom signed AB 2305 on September 20, adding Article 7.5 (Business and Professions Code sections 6134 to 6134.14). For contracts entered on or after January 1, 2027, a corporate legal funder that interferes with a substantive litigation decision or controls a litigation function commits the unauthorized practice of law. Litigation practices may not accept funder terms that restrict withdrawal, bar reporting, or penalize resistance; such terms are void. Compliant nonrecourse litigation finance is not impermissible fee sharing.

Enrolled text (California Legislative Information) → · Governor of California
CAL.Regulation

California bars corporate legal funders from directing litigation decisions

California added Article 7.5 to the Business and Professions Code, making it unauthorized practice of law for a corporate legal funder to interfere with an attorney's or litigant's substantive litigation decisions. Chapter 393, approved September 20, 2026, voids contract terms enabling such control and exposes violators to client suits for $10,000 per violation or treble actual damages. It preserves nonrecourse litigation finance without control over legal judgment.

Enrolled text (California Legislative Information) →