Attorneys: corporate legal funders

The law preserves attorney and client independence while allowing limited nonrecourse litigation financing. It creates discipline and civil-remedy consequences when funders or lawyers cross that line.

What the law does ​

• Treats a corporate legal funder’s interference with litigation judgment or control over litigation functions as unauthorized practice of law.
• Prohibits funder arrangements that influence client selection, fees, legal strategy, claims, settlements, evidence, discovery, appeals, counsel, or funding decisions based on investor returns.
• Voids contract terms that permit or facilitate this prohibited conduct.
• Bars litigation-practice contracts that restrict withdrawal, reporting, or public discussion when a nonlawyer engages in prohibited conduct, or penalize resistance or reporting.
• Allows nonrecourse litigation finance without impermissible fee sharing when funding is capped or interest-based, tied to identified existing representations, and not used to solicit or acquire clients.
• Applies only to contracts entered on or after January 1, 2027.

Who it affects ​

• Corporate legal funders and entities they control.
• Attorneys, law firms, and other litigation practices.
• Clients represented in litigation or other adversarial proceedings.

Context ​

Attorney violations are grounds for State Bar discipline, while violations under this law are not crimes.