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) →
Key points
- New Article 7.5 (B&P Code §§6134-6134.14), Chapter 393, approved September 20, 2026, applies to contracts entered into on or after January 1, 2027.California Legislative InformationCalifornia Legislative Information
- Funder interference with client selection, strategy, settlement, discovery, appeals, or counsel choice is unauthorized practice of law.California Legislative Information
- Contract provisions permitting or facilitating such conduct are void, unenforceable, and against public policy.California Legislative Information
- Violating attorneys face State Bar discipline; clients may recover $10,000 per violation or treble actual damages plus fees.California Legislative Information
- Nonrecourse litigation finance remains permitted when it does not control legal judgment.California Legislative Information
Sources2 articles across 1 outlet
California Legislative Information
Filed under
RegulationCal.AB 2305 — Corporate Legal Funder Unauthorized PracticeLitigationProfessional responsibilityFor practitionersFor governance