California Enacts Sweeping Legal Reforms to Protect Consumers

California has enacted significant legal reforms with Governor Gavin Newsom signing Assembly Bill 931 into law on October 13, 2025, introducing sweeping consumer protections for legal funding. The legislation immediately prohibits California-licensed attorneys from fee-sharing with non-lawyer entities and bans lawyers from accepting referral fees from non-lawyer sources. Key provisions include mandatory five-day cancellation windows for clients, enhanced transparency requirements in attorney-client contracts, and the elimination of hidden fees and compound interest from payment structures. These measures aim to protect consumers from predatory practices while fundamentally altering how legal services are structured and priced throughout the state.

Meanwhile, Senate Bill 37 is currently pending and would impose additional government oversight on attorney advertising practices if enacted. This companion legislation would require law firms to limit advertising language to verifiable facts only, prohibiting references to potential case results, comparisons to past verdicts, and any language that could be interpreted as misleading or deceptive. SB 37 specifically disallows the promotion of awards where attorneys or law firms pay for the prize, ensuring advertising integrity. Both bills establish penalties including compensatory damages and civil liability, creating a comprehensive regulatory framework that will dramatically reshape how California attorneys attract clients and structure their business operations.

Focus Law LA, a Southern California firm with over 20 years of experience in business law and commercial litigation, exemplifies the type of practice affected by these reforms. The firm's business litigation attorneys specialize in cost-effective strategies and personalized legal support for entrepreneurs throughout Orange County and surrounding areas. These new regulations will require firms like Focus Law to completely restructure their fee arrangements and client acquisition methods while maintaining their commitment to crafting creative solutions for small business owners. The combined effect of these legislative changes represents one of the most significant overhauls of legal practice regulations in California in recent years.