(a)No attorney licensed or otherwise authorized to practice in this state shall share legal fees directly or indirectly with an out-of-state alternative business structure unless all of the following apply:
(1)The attorney is also licensed in the state in which the alternative business structure is approved.
(2)The fees are compensation for the provision of legal services in that state.
(3)The law of that state is controlling pursuant to Rule 8.5 of the California Rules of Professional Conduct or any successor rule.
(b)A violation of this section shall constitute cause for the imposition of discipline by the State Bar of California and shall subject the attorney to the following penalties:
(1)Statutory damages of ten thousand dollars ($10,000) per violation or three times the actual
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(a)
No attorney licensed or otherwise authorized to practice in this state shall share legal fees directly or indirectly with an out-of-state alternative business structure unless all of the following apply:
(1)
The attorney is also licensed in the state in which the alternative business structure is approved.
(2)
The fees are compensation for the provision of legal services in that state.
(3)
The law of that state is controlling pursuant to Rule 8.5 of the California Rules of Professional Conduct or any successor rule.
(b)
A violation of this section shall constitute cause for the imposition of discipline by the State Bar of California and shall subject the attorney to the following penalties:
(1)
Statutory damages of ten thousand dollars ($10,000) per violation or three times the actual damages incurred by the consumer, whichever is greater.
(2)
Attorney’s costs and fees.
(3)
Injunctive or declaratory relief.
(c)
(1)
For the purposes of this section, “alternative business structure” means any entity that provides legal services while allowing nonattorney ownership or decisionmaking authority.
(2)
For the purposes of this section, “alternative business structure” does not include nonprofit organizations.
(d)
This section shall not apply to any arrangement for the sharing of legal fees if both of the following conditions are satisfied:
(1)
The arrangement for the sharing of legal fees was ordered or approved by a court or tribunal of competent jurisdiction, including, but not limited to, the establishment or distribution of a common benefit fund in coordinated, consolidated, or multidistrict litigation.
(2)
The manner in which the legal fees are to be allocated
is subject to judicial or tribunal oversight and determined to be fair, reasonable, and necessary for the administration of justice.
(e)
This section shall not apply to a contract in which all of the following are satisfied:
(1)
The contract outlines a specific dollar amount for services rendered.
(2)
No payment is related to the referral of legal services or purchase of a lead for a potential client
or case.
(3)
No payment is contingent on the amount recovered in a specific case.
(f)
Nothing in this section shall be construed as superseding the holding in Ridgley v. Lew 55 F. Supp. 3d 89 (2014).
(g)
This section shall only apply to contracts entered into on or after January 1, 2026.
(h)
This section shall remain in effect only until January 1, 2030, and as of that date is repealed.