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AB 78

Attorney's fees: book accounts.

2025-2026 Regular Session Introduced by Phillip Chen

AB 78 modifies California attorney's fee provisions for book account disputes, potentially altering litigation costs and settlement dynamics in informal credit arrangement cases.

Chaptered by Secretary of State - Chapter 28, Statutes of 2025.
#attorney'sfees #bookaccounts
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Bill Summary · AB 78

Legislative bill overview

AB 78 modifies California law regarding attorney's fees in cases involving "book accounts"—typically referring to open accounts or informal credit arrangements. The bill, authored by Assemblymember Phillip Chen, was signed into law in July 2025 after passing the Senate unanimously and the Assembly without opposition.

Why is this important

This legislation affects how attorney's fees are awarded in debt collection and commercial dispute cases involving informal credit transactions. The change could impact small businesses, creditors, and consumers involved in disputes over unpaid book accounts, potentially altering litigation costs and settlement incentives in these disputes.

Potential points of contention

  • Scope of "book accounts" definition: The precise definition and scope of what qualifies as a book account under this law may create ambiguity in application, leading to disputes over eligibility for fee awards
  • Impact on creditor collection efforts: Depending on whether the bill makes fee recovery easier or harder, it may either encourage creditors to pursue small debts through litigation or discourage such actions
  • Asymmetric litigation incentives: Changes to attorney's fee provisions can disproportionately affect smaller parties who cannot absorb legal costs, potentially shifting bargaining power in settlement negotiations

Compiled from official sources — confirm details with the bill’s official record.

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