Bill > AB931

This bill introduces comprehensive regulations for consumer legal funding in California, establishing the California Consumer Legal Funding Act. The bill defines consumer legal funding as a non-recourse transaction where a consumer assigns a contingent right to potential legal settlement proceeds to a funding company. It mandates that all such transactions must be in a written contract using plain English, with specific disclosure requirements, including the funded amount, charges, and a right of rescission within five business days. The bill prohibits consumer legal funding companies from paying referral fees to attorneys, interfering with legal claims, or providing misleading information. It also sets strict limitations on charges, which cannot exceed 36 months from the funding date. Additionally, the bill restricts attorneys from sharing legal fees with out-of-state entities that allow non-lawyer ownership, with specific exceptions, and establishes penalties for violations, including statutory damages up to $10,000 per violation. The legislation aims to protect consumers by ensuring transparency, preventing predatory practices, and maintaining the integrity of legal funding transactions, with provisions set to take effect on January 1, 2026, and remain in effect until January 1, 2030.

Justice

https://leginfo.legislature.ca.gov/faces/billStatusClient.xhtml?bill_id=202520260AB931