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AB 931

State Bar Act: consumer legal funding.

2025-2026 Regular Session Introduced by Ash Kalra

AB 931 establishes State Bar licensing and disclosure requirements for companies providing litigation funding advances to California consumers.

Chaptered by Secretary of State - Chapter 565, Statutes of 2025.
#statebaract #consumerlegalfunding
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Bill Summary · AB 931

Legislative bill overview

AB 931 amends California's State Bar Act to regulate consumer legal funding (also known as lawsuit financing or litigation funding), where third parties provide cash advances to plaintiffs in exchange for a portion of settlement or judgment proceeds. The bill establishes licensing requirements, disclosure standards, and consumer protections for companies offering these financial products.

Why is this important

Litigation funding has grown significantly as an alternative financing option for individuals unable to afford legal costs, but the industry operates largely unregulated. This creates risks of predatory practices, undisclosed fees, and conflicts of interest. AB 931 brings transparency and oversight to protect consumers while clarifying the legal status of these arrangements in California.

Potential points of contention

  • Cost and accessibility balance: Stricter regulations may increase operational costs for funders, potentially making litigation financing more expensive or inaccessible to lower-income plaintiffs who rely on it
  • Industry definition disputes: The bill's scope regarding what constitutes "consumer legal funding" may create gray areas with other financial products (loans, lines of credit, attorney contingency arrangements)
  • Regulatory burden: New licensing and compliance requirements add administrative overhead; questions remain about State Bar enforcement capacity and whether this agency is the appropriate regulator

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

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