FAQ: California's New Legal Funding and Advertising Regulations
TL;DR
Seber Bulger Law gains advantage as new California laws increase transparency in legal funding and advertising, creating trust that attracts more clients.
AB 931 requires plain language contracts with explicit fees, while SB 37 restricts promotional content, establishing clear legal funding and advertising procedures.
These laws protect consumers from unethical practices, ensuring honest attorney-client relationships and making legal services more accessible and trustworthy for all.
California's new legal funding laws ban referral fees and misleading awards in ads, reshaping how lawyers interact with litigation financing companies.
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California enacted Assembly Bill 931, which regulates legal funding contracts, and Senate Bill 37, which imposes stricter parameters on attorney advertising practices.
Governor Gavin Newsom signed Assembly Bill 931 into law on October 13, 2025. The content doesn't specify exact effective dates, but both laws were passed in late 2025.
AB 931 requires all legal funding contracts to be written in plain language easily understood without professional guidance, explicitly outline all fees, include the maximum award consumers can expect, and prohibits lawyers from receiving referral fees from legal funders.
SB 37 prohibits attorneys from referencing past judgments in ways that influence consumers to engage their services and bans the use of awards where recipients pay to receive them in advertising materials.
These laws were designed to protect consumers, maintain attorney-client privilege, ensure legal funding companies interact with consumers honestly and ethically, and protect consumers from manipulative or unethical marketing strategies.
California-licensed attorneys, legal funding companies, and consumers seeking legal services or litigation funding in California are all affected by these new regulations.
The laws protect consumers by ensuring transparent legal funding contracts, preventing referral fee arrangements between lawyers and funders, and eliminating manipulative advertising practices that could influence legal service decisions.
These laws apply specifically to California-licensed attorneys and legal funding activities within the state of California.
Consumers should know that legal funding contracts must now be clearer and more transparent, attorney advertising is more strictly regulated, and these changes are designed to protect them from unethical practices in the legal industry.
Curated from 24-7 Press Release
