Corporate investment in litigation practice.

Plain English Breakdown

The exact penalties for violating the provisions of this bill are not detailed in the provided official summary text.

Rules for Corporate Investors in Law Firms

This law stops corporate investors from interfering with how lawyers make decisions or run cases.

What This Bill Does

• Prohibits corporate investors involved in litigation practices from interfering with substantive litigation decisions or exercising control over litigation functions.
• Prevents corporate investors and entities they control from entering into contracts, agreements, or arrangements that would enable prohibited interference or control over a litigation practice.
• Deems violations of these provisions as cause for disciplinary action by the State Bar, including fines and other penalties.

Who It Names or Affects

• Lawyers who work in litigation practices.
• Corporate investors involved with law firms.
• The State Bar of California which regulates lawyers.

Terms To Know

litigation practice

A business that handles lawsuits and legal disputes.

corporate investor

A company or corporation that invests money in a law firm.

Limits and Unknowns

• The bill does not specify the exact penalties for breaking these rules.
• It is unclear how this will affect existing contracts between corporate investors and law firms.

Official Summary Text

AB 2305, as amended, Kalra.
Corporate investment in litigation practice.
Existing law, the State Bar Act, provides for the licensure and regulation of attorneys by the State Bar of California (State Bar), a public corporation governed by a board of trustees. Existing law regulates, among other things, fee agreements, legal advertising and referral services, the sale of financial products to a client, and the allowable forms of organization of a law practice, including a law corporation. A violation of these provisions may result in disciplinary action against a licensed attorney or other remedies.
This bill would prohibit a corporate investor involved in any litigation practice, among other things, from interfering with a substantive litigation decision or exercising control over a litigation function.
This bill would prohibit a corporate investor, or an entity it
controls, from entering into any contract, agreement, or arrangement with a litigation practice if the contract would enable prohibited interference or control under these provisions, and would further prohibit and void a contract or terms that would permit or facilitate prohibited interference or control, as specified.
This bill would deem a violation of these provisions as cause for the imposition of discipline by the State Bar and subject an attorney and the corporate investor to statutory or actual damages, attorney’s fees and costs, and other relief, as specified. The bill would define terms for these purposes.

Current Bill Text

Download Bill PDF