Bill would bar private-equity and hedge-fund direction of litigation decisions

The author introduced AB 2,305 to prohibit corporate investors from controlling or interfering with litigation decisions, arguing that litigation decisions must be made by licensed attorneys and their clients rather than by investors seeking profit.

Casey Johnson, president-elect of the Consumer Attorneys of California and sponsor of the measure, told the committee that while California already has rules against nonlawyer ownership and fee sharing, private-equity models and management service organizations can exert indirect influence and that AB 2,305 closes remaining loopholes.

Supporters including trial lawyer associations spoke in favor; the Civil Justice Association of California said it would support the bill if amended to add third‑party funding disclosure requirements. Committee members raised questions about enforcement mechanisms; the motion to hear the item was held for full committee action and later the bill was placed on call and moved as the process required.