Plain English Breakdown
The source material uses 'would' language in some sections but confirms final enactment; however, it explicitly leaves the effective date blank.
AB-931: Rules for Consumer Legal Funding
This law defines consumer legal funding, sets rules for contracts and language requirements, bans paying lawyers to refer customers, and temporarily stops California attorneys from sharing fees with certain out-of-state groups.
What This Bill Does
- Defines consumer legal funding as a deal where a company buys the right to part of a person's future lawsuit settlement or award.
- Requires all consumer legal funding contracts to be in writing, list the payment amount upon finishing litigation, and itemize any one-time charges.
- Mandates that if a contract is discussed in another language, the customer must get copies in both English and that other language.
- Limits how long companies can charge fees on these deals to no more than 36 months from the funding date.
- Bans funding companies from paying lawyers or law firms any money for sending customers their way.
- Prohibits attorneys licensed in California from sharing legal fees with out-of-state entities that allow non-lawyers to own them, until January 1, 2030.
Who It Names or Affects
- Consumer legal funding companies operating in the state
- Attorneys and law firms practicing in California
- Consumers who receive money for their pending legal claims or lawsuits
Terms To Know
- Contingent right to proceeds
- The chance that a person will get paid from a future lawsuit settlement, judgment, award, or verdict.
- Consumer legal funding company
- A business that gives money now in exchange for part of the money a customer might win later in court.
Limits and Unknowns
- The ban on sharing fees with out-of-state entities only applies to contracts signed on or after January 1, 2026.
- The official text does not state the specific effective date for when these rules begin.