§ 6251. — 6251. (Added by Stats. 2025, Ch. 565, Sec. 3.)

California § 6251.

• Jurisdiction: California
• Code BPC: Business and Professions Code - BPC
• Div. 3.: DIVISION 3. PROFESSIONS AND VOCATIONS GENERALLY
• Ch. 4.: CHAPTER 4. Attorneys
• Art. 17.: ARTICLE 17. The California Consumer Legal Funding Act

Text

(a)
(1)
All consumer legal funding transactions shall be codified in a written contract.
(2)
If the consumer legal funding contract was negotiated in a language other than English, the consumer shall be provided a copy of the contract in both English and the language in which the contract was negotiated.
(b)
All contracts codifying a consumer legal funding transaction shall meet the following requirements:
(1)
The contract shall be drafted in plain English such that the average consumer can read and understand the terms of the
contract without having to obtain the assistance of a professional.
(2)
All contract terms shall be contained in the agreement when first presented to the consumer.
(3)
The contract shall contain a right of rescission allowing the consumer to cancel the contract without penalty or further obligation if, within five business days after the funding date, the consumer returns all funds disbursed by the consumer legal funding company.
(4)
The contract requires the consumer to initial receipt of every page of the agreement.
(5)
The contract contains a statement that there shall be no fees or charges to be paid by the consumer other than what is disclosed in the
contract.
(6)
The contract contains a statement of the maximum amount the consumer may be obligated to pay under the contract other than in a case of material breach, fraud, or misrepresentation by or on behalf of the consumer.
(7)
The contract contains a clear statement of how charges, including any applicable fees, are incurred or accrued.
(c)
The contract shall contain a written acknowledgement by an attorney retained by the consumer attesting to the following:
(1)
The attorney has reviewed the disclosures specified in Section 6252 with the consumer.
(2)
The attorney is being compensated on a
contingency basis pursuant to a written agreement.
(3)
All proceeds of the legal claim will be disbursed through the attorney’s client trust account or a separate settlement fund established to receive the proceeds of the legal claim on behalf of the consumer.
(4)
The attorney agrees to disburse funds from the legal claim in accordance with the contract and take any steps necessary to ensure that the terms of the litigation funding contract are fulfilled.
(5)
A statement that the attorney has not received a referral fee or other consideration from the consumer legal funding company in connection with the contract and that the attorney will not receive future fees or consideration from the legal funding company.
(d)
The absence of the acknowledgement required by subdivision (c) shall render the consumer legal funding transaction and associated contract null and void.
(e)
Notwithstanding subdivision (d), a contract for a consumer legal funding transaction shall remain valid and enforceable in the event the consumer terminates the attorney who made the attestation required pursuant to subdivision (c).
(f)
Notwithstanding any other law, a provision of the contract for a consumer legal funding transaction shall not impose a prepayment penalty on a consumer.

Legislative History

Added by Stats. 2025, Ch. 565, Sec. 3. (AB 931) Effective January 1, 2026.