Business and Professions Code section 6254
(a)
A consumer legal funding company shall be prohibited from doing any of the following:(1)
Paying or offering to pay commissions, referral fees, or other forms of consideration to any attorney, law firm, or any of their employees for referring a consumer to the company.(2)
Accepting any commissions, referral fees, rebates, or other forms of consideration from an attorney, law firm, or any of their employees.(3)
Intentionally providing a consumer materially false or misleading information regarding its products or services.(4)
(A)Referring, in furtherance of legal funding, a customer or potential customer to a specific attorney, law firm, or any of their employees.(B)
Nothing in subparagraph (A) shall prevent a consumer legal funding company from referring a consumer to a publicly available attorney referral service operated by a local bar association of the State Bar of California.(5)
Providing funding to a consumer who has previously assigned or sold portions of the consumer’s right to proceeds from the consumer’s legal claim without first making payment to satisfy that assignment if the consumer legal funding company knew or should have known that the consumer had assigned or sold a portion of their rights to the proceeds of the consumer’s legal claim.(6)
Receiving any right to, or making, any decisions with respect to the conduct of the underlying legal claim or any settlement or resolution thereof.(7)
Attempting to obtain a waiver of any remedy or right by the consumer, including, but not limited to, the right to trial by jury.(8)
Paying or offering to pay for court costs, filing fees, or attorney’s fees either during or after the resolution of the legal claim, using funds from the consumer legal funding transaction.(9)
Offering consumer legal funding on the condition that a consumer that is represented by counsel terminate that representation and adopt counsel recommended by the consumer legal funding company.(10)
Knowingly assisting a lawyer or law firm that is enticing or intends to entice a consumer to bring a claim that the company knows or has reason to know is fabricated or otherwise not brought in good faith.(b)
Any legal funding company that engages in conduct that is prohibited by subdivision (a) shall be liable for all of the following:(1)
Automatic termination of the contract for the consumer legal funding transaction.(2)
Statutory damages not to exceed ten thousand dollars ($10,000) per violation or three times the actual damages incurred by the consumer, whichever is greater.(3)
Attorney’s costs and fees.(4)
Injunctive or declaratory relief.(c)
In assessing the amount of statutory damages to be set pursuant to paragraph (2) of subdivision (b), the court shall consider any one or more of the relevant circumstances presented by any of the parties to the case, including, but not limited to, the nature and seriousness of the misconduct, the number of violations, the persistence of the misconduct, the length of time over which the misconduct occurred, the willfulness of the defendant’s misconduct, and the defendant’s assets, liabilities, and net worth.
Source:
Section 6254, https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=BPC§ionNum=6254. (updated Jan. 1, 2026; accessed Dec. 15, 2025).
