Lawyer Regulation Alert
By Dave Majchrzak and Heather Rosing
On October 10 and 11, 2025, Governor Gavin Newsom signed two bills, Assembly Bill 931 and Senate Bill 37, that will impact the law of lawyering effective January 1, 2026. We want the membership to be aware of these new laws since they may impact the way you advertise and attract clients. The changes are significant and violations can have serious consequences.
We highly recommend reviewing the revised portions of the State Bar Act in their entirety so you may be aware of the details of the additions and changes. We also provide the following summary what these two bills collectively add to the State Bar Act portion of California’s Business and Professions Code:
California Business & Professions Code Section 6153
Section 6153 was amended to add the right for any person to bring a civil action for statutory damages, attorney’s fees, and injunctive relief for violation of section 6152, which forbids the use of runners and cappers.
California BPC Section 6155
Section 6155 was amended to eliminate the previous statutory authority of any person to seek to enjoin violations of the section, which regulates and requires registration of law referral services and provides a definition of permissible joint advertising.
California BPC Section 6155.1
Section 6155.1 was renumbered from 6156 and amended to provide for civil penalties for violation of Bus & Prof 6155 (which precludes operating for the direct or indirect purpose of referring potential clients to lawyers (or lawyers from accepting clients from such services) unless it is a registered referral service with the State Bar.
California BPC Section 6156
Section 6156 was added to preclude licensees or lawyers authorized to practice in California from fee-sharing with an ABS¹ law firm unless (1) lawyer is licensed in the state where the ABS is approved; (2) fees are for services in that state; and (3) law of that state controls under rule 8.5. Does not apply where fees are ordered or approved by a court or where (1) the contract outlines a specific dollar amount for the services, (2) the payment is not related to a referral or lead purchase, and (3) the fee is not contingent on the amount recovered.
California BPC Section 6156.5
Section 6156.5 was added to add the right for any person to bring a civil action for statutory damages, attorney’s fees, and injunctive relief for violation of section 6155, which regulates and requires registration of law referral services.
California BPC Section 6157
Section 6157 was amended to address definitions of advertise, advertising, electronic medium, and lawyer.
California BPC Section 6157.2
Section 6157.2 was amended to restrict certain information from being included in lawyer advertisements, add requirements for information that must be included in advertisements, and add the right for any person to bring a civil action for statutory damages, attorney’s fees, and injunctive relief for violation of the section.
California BPC Section 6158.4
Section 6158.4 was amended to address complaints to the State Bar for violation of lawyer advertising requirements, including the safe harbor to withdraw violative advertisements.
California BPC Section 6158.5
Section 6158.5 was amended to provide that the article does not apply to broadcasters that disseminate advertisements that are subject to the article.
California BPC Section 6158.7
Section 6158.7 was amended to include that a licensee’s violations of sections 6157.1, subdivision (a) or (b) of section 6157.2, or section 6157.3 shall be grounds for discipline.
California BPC Section 6251
Section 6251 was added to provide that all consumer legal funding must be codified in a written contract that is understandable and has a five-day right of rescission, maximum amount that the consumer would be obligated to pay, and that is reviewed by a lawyer for the consumer attesting (1) the lawyer has reviewed, (2) the lawyer is being compensated on a contingency basis, (3) the proceeds will be disbursed through the lawyer’s CTA, (4) the lawyer will make disbursements according to the legal funding contract, and (5) the lawyer has not received a referral fee or other consideration from the legal funding company and will not receive future fees or consideration from the funding company.
California BPC Section 6252-6253
Section 6252-6253 was added to provide for disclosures and repayment terms of consumer legal funding transactions.
California BPC Section 6254
Section 6254 was added to prohibit legal funding companies from paying or accepting commissions or referral fees; referring, in further of lending, a client to a specific lawyer or law firm; playing any role in the conduct of the claim or settlement/resolution decisions and process; paying or offering to pay for costs or fees either during or after the resolution of the claim, using funds from the legal funding transaction; making the funding contingent on the consumer terminating representation by one lawyer to have another assist; or knowing assisting or lawyer or law firm in bringing a claim that the funder knows is fabricated or not brought in good faith.
California BPC Section 6255
Section 6255 was added to provide that the contingent right to receive an amount of the potential proceeds of a legal claim is assignable by a consumer.
California BPC Section 6256
Section 6256 was added to provide that a lawyer and lawyer’s immediate family may not have an interest in the legal funding company that a client has retained; and that a lawyer may not disclose confidential information to legal funding company.
We note that there is currently litigation in the Central District of California where the complaint seeks to have Assembly Bill 931 to be held unconstitutional and preclude its enforcement. But the pleading focuses on the fee-sharing limitation of section 6156. More information may be found in the docket for Wisner v. Bonta.
1) Alternative Business Structure
