Attorneys: corporate legal funders.

The term 'corporate lender, legal funder' (or 'corporate lender legal funder') is consolidated to 'corporate legal funder' throughout Sections 6134.8 and 6134.12, creating a single consistent term for the regulated entity.

Section 6134(a) legislative findings now reference 'corporate legal funders' instead of 'corporate investors, legal funders,' removing 'corporate investors' as a separately named category in the stated intent (though the broad definition of 'corporate legal funder' likely still covers such entities).

The definition of 'litigation practice' in Section 6134.2(c) is corrected from 'a law firm an attorney, law firm, or other professional association' to 'an attorney, law firm, or other professional association,' fixing a drafting error with a duplicated phrase.

Section 6134.4 is restructured: the old standalone heading 'A corporate lender doing any of the following shall constitute the unauthorized practice of law' is removed and replaced with a cleaner subsection (a) introduction referencing Section 6125 explicitly.

The term 'corporate investor' is replaced with 'corporate legal funder' throughout the bill. The new definition is broader in structure ('no matter how it is legally structured, labeled, organized, or operated') and adds 'service' as a type of arrangement connecting the entity to a litigation practice.

A new definition for 'nonrecourse litigation finance' is added: the provision of capital to a litigation practice whose repayment is contingent on the successful resolution of specific, identified legal representations.

The definition of 'litigation practice' is expanded to include 'an attorney' as a covered entity, not just law firms and professional associations.

The nonrecourse litigation finance exemption in Section 6134.10 now includes an additional condition: it applies 'so long as it does not otherwise constitute the unauthorized practice of law as set forth in this article,' narrowing the safe harbor.

Section 6134.4 is restructured: the prohibition on certain contract terms (restricting withdrawal from representation, prohibiting reporting to the State Bar, imposing financial penalties for reporting) is moved into Section 6134.4(b) as a direct prohibition on litigation practices contracting with corporate legal funders, rather than existing only as a voiding provision in Section 6134.8(c).

Section 6134.12(a) is clarified to state that a violation by an attorney shall be grounds for discipline by the State Bar, making the disciplinary trigger more explicit.

The entire enforcement mechanism is reframed: prohibited conduct by corporate investors/lenders now constitutes 'unauthorized practice of law' under Section 6125 rather than being a standalone violation. This ties the bill to an existing legal framework and may affect how it is enforced and interpreted.

A new section (6134.10) creates an explicit exemption for nonrecourse litigation finance, provided the contract specifies a dollar amount or maximum payment to the lawyer, limits returns to a multiple of funded amount or interest rate, precludes use of funds for client solicitation, and is solely for fees/expenses of already-commenced representations.

References to 'corporate investor' throughout the operative provisions are expanded to 'corporate investor lender,' potentially broadening the category of covered entities to include lenders specifically.

The definition of 'litigation practice' is narrowed from any representation of parties in dispute resolution settings to specifically 'the representation of a law firm or other professional association that represents parties' in such settings, limiting the bill's applicability.

Two new definitions are added: 'nonlawyer' (any person or entity not licensed by the State Bar to practice law) and 'unauthorized practice of law' (same meaning as Section 6125, specifically including a nonlawyer having authority to direct or control a lawyer's independent professional judgment).

A new section (6134.14) provides that the article only applies to contracts entered into on or after January 1, 2027, giving existing arrangements a grace period.

A new provision explicitly states that notwithstanding Section 6126, a violation of this article is not a crime, removing any potential criminal penalty for violations.

The entire amendment to Section 6155.1 was deleted. That provision had established how civil penalties for lawyer referral service violations would be assessed and recovered, including references to Sections 17206 and 17206.1, and specified that penalties collected go to a State Bar special fund.

Section 6134.10 was restructured into two subdivisions: (a) discipline by the State Bar, and (b) civil penalties explicitly limited to actions 'brought by the client.' Previously the civil penalty provisions did not specify who could bring the action, leaving it potentially open to other parties.

In the statutory damages provision, 'consumer' was changed to 'consumer, client,' broadening the class of persons whose actual damages can be tripled.

Assembly Members Stefani and Zbur were added as coauthors of the bill.

Adds an entirely new Article 7.5 (Sections 6134 through 6134.10) to the Business and Professions Code titled 'Corporate Investment in Litigation Practice,' creating a comprehensive regulatory regime that did not exist in the introduced version.

The original narrow amendment to Section 6155.1 (deleting a reference to Section 17536 in the civil penalty definition for lawyer referral service violations) is retained but is now a secondary component of a much broader bill focused on corporate investment in litigation.

Defines 'corporate investor' as any entity (including private equity groups, hedge funds, investment firms, or nonattorney corporations) with the primary purpose of raising or managing capital that participates in a litigation practice through ownership, financing, or management arrangements. Also defines 'control' and 'litigation practice.'

Prohibits corporate investors from interfering with substantive litigation decisions including which clients to represent, scope of representation, financial terms, legal strategy, whether to file or dismiss claims, settlement decisions, evidence presentation, discovery conduct, and appeals or procedural choices.

Prohibits corporate investors from exercising control over litigation functions such as selecting counsel based on profit maximization, setting financial incentives tied to outcomes that compromise attorney independence, making funding allocation decisions affecting strategy, or requiring decisions be based on investor return metrics rather than client objectives.

Prohibits contracts between corporate investors and litigation practices that would enable prohibited interference or control. Any such contractual provision is void, unenforceable, and against public policy. Also prohibits contract clauses that restrict attorneys or clients from withdrawing from representation due to interference, prohibit reporting to the State Bar, or impose financial penalties for reporting or resisting corporate influence.

Establishes penalties for violations: State Bar discipline, statutory damages of $10,000 per violation or three times actual consumer damages (whichever is greater), attorney's costs and fees, and injunctive or declaratory relief. Both the attorney and the corporate investor are subject to these penalties.