AB 2305: Corporate investment in litigation practice.

Existing law, the State Bar Act, provides for the licensure and regulation of attorneys by the State Bar of California (State Bar), a public corporation governed by a board of trustees. Existing law regulates, among other things, fee agreements, legal advertising and referral services, the sale of financial products to a client, and the allowable forms of organization of a law practice, including a law corporation. A violation of these provisions may result in disciplinary action against a licensed attorney or other remedies.

This bill would prohibit a corporate investor involved in any litigation practice, among other things, from interfering with a substantive litigation decision or exercising control over a litigation function.

This bill would prohibit a corporate investor, or an entity it controls, from entering into any contract, agreement, or arrangement with a litigation practice if the contract would enable prohibited interference or control under these provisions, and would further prohibit and void a contract or terms that would permit or facilitate prohibited interference or control, as specified.

This bill would deem a violation of these provisions as cause for the imposition of discipline by the State Bar and subject an attorney and the corporate investor to statutory or actual damages, attorneys fees and costs, and other relief, as specified. The bill would define terms for these purposes.