Regulation
California and Georgia just regulated litigation funding. Here is how the two laws compare.
Georgia's SB 69 was signed in April, California's AB 931 in October. Both take effect January 1, 2026. What's notable isn't that regulation finally arrived. It's what these laws tell us about where the industry is headed.
Logan Alters · December 2, 2025 · 3 min read
- Jan 1, 2026
- Both laws take effect
- 5 days
- Cancellation right, both states
- $25,000+
- Georgia fundings discoverable
- 1-5 yrs
- Georgia felony for willful violations
The common framework
California's AB 931 and Georgia's SB 69 share the same DNA:
Written contracts with plain-language disclosures. No more burying terms in legalese. Both states require clear, upfront disclosure of funded amounts, charges, and repayment schedules.
Five-day cancellation rights. Consumers can walk away without penalty. Basic consumer protection that any ethical funder should welcome.
No referral fees. Funders can't pay attorneys for referrals. Attorneys can't accept payment from funders. California goes further: attorneys and their family members can't have financial interests in funders serving their clients.
No litigation control. Funders cannot direct strategy, settlement decisions, or choice of counsel. Georgia's language is particularly strong, requiring courts to construe this "strictly in favor of" the funded party.
Attorney attestations. Attorneys must formally acknowledge they've reviewed disclosures with clients and haven't received (and won't receive) referral fees.
Where they differ
The message from legislators: litigation funding is here to stay, but opacity is over.
| California AB 931 | Georgia SB 69 | |
|---|---|---|
| Oversight | State Bar regulation | Registration with Dept. of Banking and Finance |
| Foreign investment | No restriction | Prohibits foreign adversary/sovereign wealth fund affiliations |
| Rate limits | Charges capped at 36 months | No rate cap, but recovery limited to plaintiff's net share |
| Assignment | No restriction | Prohibited (narrow exceptions for affiliates, UCC security interests) |
| Funder liability | None | Joint and several liability for frivolous litigation sanctions ($25K+ fundings) |
| Discovery | Not addressed | Funding agreements $25K+ discoverable by opposing parties |
| Penalties | $10K per violation or 3x damages; State Bar discipline | Contract void; willful violations are felonies (1-5 years) |
The rate structures worth understanding
The rate limit approaches deserve a closer look because they reveal two different philosophies for protecting consumers.
California's 36-month cap is a time-based limit. Charges (including all fees and interest, however labeled) stop accruing after 36 months from the funding date. If a case drags on for five years, the consumer only owes what accumulated through month 36. This protects plaintiffs in complex litigation that takes longer than anyone expected. However, there's no cap on the rate itself, so a funder charging high rates can still accumulate significant amounts within that 36-month window.
Georgia's "plaintiff's net share" limit is a recovery-based limit. The funder cannot receive more than the plaintiff's portion of proceeds after attorney's fees and costs are paid. If a case settles for $100,000 and the attorney takes $40,000 in fees and costs, the funder's cap is $60,000 regardless of what the contract says.
Important caveat: this calculation only subtracts attorney's fees and costs. It doesn't account for medical liens, Medicare/Medicaid liens, health insurance subrogation, or other reductions. In that same example, if there's $25,000 in medical liens, the plaintiff takes home $35,000 while the funder's statutory cap is still $60,000. "Plaintiff's net share" sounds more protective than it is in lien-heavy cases.
These solve different problems. California's approach protects against runaway accumulation over time. Georgia's approach ensures the funder never takes the entire settlement, no matter what the math says they're owed.
Both represent a significant shift from the status quo, where some funders use compound interest structures that can result in payoff amounts exceeding the plaintiff's total recovery. We've seen contracts where plaintiffs owed more than they received. That outcome is now illegal in both states.
For law firms evaluating funders, the question to ask is simple: show me the payoff schedule at 12, 24, 36, and 48 months. If the numbers make you uncomfortable, your clients should be working with someone else.
“Show me the payoff schedule at 12, 24, 36, and 48 months. If the numbers make you uncomfortable, your clients should be working with someone else.”
The bigger picture
California and Georgia are now the two largest states with comprehensive litigation funding regulations. Both take effect January 1, 2026.
Law firms working with funders in either state should review their current arrangements and ensure contracts meet the new disclosure and attestation requirements before year-end.
Questions about how these changes affect your practice? Email us at blog@claimangel.com. We're tracking regulatory developments across all 50 states.
For educational purposes only, not legal advice. Laws change and courts reinterpret them. Check the dated sources on this page, and talk to a lawyer licensed in your state about your own case.
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