Plain English Breakdown
The official text uses both 'corporate investor' and 'corporate lender'; the summary focuses on 'lender' as per the bill title, but the law covers investors involved in litigation practice.
Rules for Corporate Lenders in Legal Cases
This law stops corporate lenders from controlling important legal decisions or contracts that let them control lawsuits, while still allowing nonrecourse litigation finance.
What This Bill Does
- It makes it illegal for a corporate lender to interfere with important decisions about a lawsuit or exercise control over how the case is run.
- It bans corporate lenders and their companies from signing deals that would let them control legal work in this way.
- It says any contract terms that allow this kind of control are not valid.
- It states that nonrecourse litigation finance is allowed and does not count as illegal fee sharing.
- It allows the State Bar to discipline attorneys who break these rules.
Who It Names or Affects
- Corporate lenders involved in legal cases
- Attorneys licensed or authorized to practice law in California
- Entities controlled by corporate lenders
Terms To Know
- Nonrecourse litigation finance
- A type of funding where the lender only gets paid if the lawsuit wins money.
- Unauthorized practice of law
- When someone who is not a lawyer tries to control legal work or make important decisions about a case.
Limits and Unknowns
- This law only applies to contracts signed on or after January 1, 2027.
- Breaking these rules does not lead to criminal charges like jail time under this specific bill.
- The bill defines terms for its own use but the summary does not list all of them.