California Legal Funder Law Seeks to Rein in Investors

Legal Services Transactions Team Co-Leader Trisha Rich was cited in a Law360 article about California Assembly Bill (AB) 2305, a new law establishing restrictions and potential liability for corporate legal funders involved with litigation practices. The legislation prohibits funders from influencing attorneys' professional judgment, litigation strategy, settlement decisions and other substantive functions, but it does preserve qualifying nonrecourse litigation finance arrangements. The article also considered whether other states will adopt similar measures as regulators respond to growing outside investment in the legal industry. Trisha pointed out the new framework aligns with protections already typically incorporated into management services organization (MSO) agreements.

"We have always said [to our clients] that the decision of what clients or matters to take on has to remain with the law firm," she said.

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