CA AB931

Establishes the California Consumer Legal Funding Act, defining consumer legal funding as a nonrecourse transaction where a consumer assigns a contingent right to potential legal claim proceeds to a funding company in exchange for upfront payment

Requires consumer legal funding contracts to be in writing, include plain English terms, disclose the funded amount, itemize all charges, provide a repayment schedule, and allow a 5-day rescission period; charges are capped at 36 months from the funding date

Prohibits consumer legal funding companies from paying referral fees to attorneys, referring consumers to specific attorneys, making decisions about the underlying legal claim, or using funds to pay court costs or attorney fees

Prohibits California-licensed attorneys from sharing legal fees with out-of-state "alternative business structures" (entities with nonlawyer ownership) unless the attorney is also licensed in that state and specific conditions are met; this provision applies to contracts from January 1, 2026 through January 1, 2030

Establishes penalties for violations including statutory damages of $10,000 per violation or three times actual damages (whichever is greater), attorney's fees, and injunctive relief; attorney violations constitute grounds for State Bar discipline