AB 931 Passes Senate Judiciary Committee
Posted: July 4th, 2025
AB 931 Passes Senate Judiciary Committee: What California’s New Litigation
Funding Bill Means for Attorneys and Court Reporting Vendors
AB 931, a key consumer protection bill backed by the Consumer Attorneys of California (CAOC), is making waves in the legal industry, and for good reason. The bill, which addresses transparency and ethics in litigation funding, recently passed the California Senate Judiciary Committee with a decisive 11-2 vote.
Casey Johnson, CAOC’s 2nd Vice President, testified in Sacramento in strong support of the legislation, helping to ensure its successful advancement through the committee.
But while AB 931 is designed to rein in predatory litigation finance practices, it also carries important implications for attorneys working with third-party legal vendors, especially court reporting firms that offer deferred or non-recourse payment models.
What Is AB 931?
In plain English: AB 931 regulates companies that give money to plaintiffs before their lawsuits settle, a practice known as litigation funding.
These funding companies often:
• Charge very high fees
• Use complex contracts that are hard to understand
• Offer kickbacks or referral bonuses to lawyers in exchange for client referrals
AB 931 changes that by requiring:
• Contracts to be clear, written in plain language, and fully transparent
• A five-day cancellation window for clients
• No hidden fees, compounding interest, or abusive repayment terms
• No kickbacks or referral incentives to or from attorneys
• Strong penalties (up to $10,000 per violation, plus cancellation rights and legal fees)
It also reinforces Rule 5.4 of the California Rules of Professional Conduct, which prohibits fee-sharing between lawyers and non-lawyers, a rule designed to protect legal ethics and prevent conflicts of interest.
⚠️ Why This Matters for Court Reporting Vendors
Although AB 931 is focused on litigation finance, its ripple effects could extend into the world of court reporting, especially with firms that operate under deferred payment or nonrecourse models, where the law firm doesn’t pay for services until the case settles, and possibly not at all if the case is lost.
These financial structures can resemble litigation funding, which could raise ethical red flags, especially if:
• The court reporting company is not owned or operated by certified court reporters
• The vendor is structured as an Alternative Business Structure (ABS), commonly found out of state
• Any part of the arrangement could be seen as fee-sharing or outcome-dependent
Under AB 931 and Rule 5.4, California law firms must steer clear of any vendor arrangement that could be interpreted as an unauthorized fee split or an unethical referral.
KW Court Reporting: Transparent. Ethical. Compliant.
At KW Court Reporting, we applaud the passage of AB 931 and the efforts of CAOC in protecting California consumers and preserving legal integrity.
We want to assure our clients that:
• We do not participate in kickbacks, referral bonuses, or outcome-based billing
• We are 100% court reporter-owned and California-based – not an ABS or outside entity
• We follow all California ethics rules, including Rule 5.4
• Our billing is straightforward, transparent, and never tied to case results
By choosing KW Court Reporting, you’re partnering with a vendor who puts your ethics, your clients, and your professional reputation first.
What Attorneys Should Do Next
If you’re currently working with any court reporting firm that:
• Offers “no win, no pay” or nonrecourse payment structures
• Operates under non-lawyer ownership or out-of-state control
• Requests or offers referral incentives or “preferred rates” for client volume
…it may be time to reassess. These arrangements could violate AB 931 and expose your firm to disciplinary action under Rule 5.4.
We are California-owned and operated, and fully compliant with AB 931, Rule 5.4, and CCR § 2475. Our billing is clear, fair, and never tied to litigation outcomes.
When you work with KW, you’re working with a vendor that puts your clients—and the integrity of the judicial process—first.
We’re Here to Help
If you’re unsure whether a vendor’s billing model or ownership structure puts your firm at risk, KW Court Reporting is here to help. We’ll walk you through any concerns, explain the ethical boundaries, and ensure your litigation support team remains fully compliant and trustworthy.
Contact KW Court Reporting to learn more about how we protect your practice – and your clients – every step of the way.
