PE, Hedge Funds Are Barred from Steering Law Firms in California

Corporate attorney Pippa Balestrieri was quoted in a Bloomberg Law article about California Assembly Bill (AB) 2305, recently signed by Gov. Gavin Newsom. The law goes into effect January 1, 2027, and targets outside funders for litigation practices, in particular alternative business structures (ABS) and management services organizations (MSOs). It prohibits ABS, MSOs, private equity investors, hedge funds and other capital providers from influencing attorney judgment or litigation decision-making. Pippa told Bloomberg Law the legislation does not introduce new limits so much as it reiterates existing rules governing MSO structures.

"I don't see this as being a kind of watershed moment for the MSO market in California," she said. "I see this as, if anything, underlining for outside capital the need to hire competent counsel, hire people who know what they're doing when they're structuring your deals."

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