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Committee advances AB 743 to license commercial lawsuit financiers
Summary
The Assembly Banking and Finance Committee voted to pass AB 743 as amended, a bill to require licensing and bonding for commercial litigation finance companies operating in California, supporters said the change will increase transparency while no opponents were recorded at the hearing.
Assemblymember Rodriguez introduced AB 743, a bill that would require entities engaged in commercial lawsuit financing to obtain a license from the Department of Financial Protection and Innovation and to maintain a surety bond; the Assembly Banking and Finance Committee voted to pass the bill as amended and refer it to the Assembly Appropriations Committee.
The author told the committee that commercial litigation financing is a growing, largely unregulated industry involving hedge funds, private equity and other investors that provide upfront capital to fund lawsuits in exchange for a share of any recovery. Supporters argued the product is opaque and sometimes used by bad actors; Jonathan Stroud of Unified Patents said, “Licensing is a small but important first step in understanding and addressing concerns related to this emerging alternative investment financial product.”
Advocates including the Civil Justice Association of California and trade groups argued licensure and a surety bond would increase transparency and provide protections for Californians and the justice system. Roxanne Gould of the Alliance for Responsible Consumer Legal Funding told the committee she supports the bill’s objective but cautioned that “legal funding is different than litigation financing” and urged precise definitions so consumer‑oriented products are not swept into the commercial licensing regime.
There was no recorded opposition at the hearing. Multiple business groups (California Chamber of Commerce, California Trucking Association, American Property Casualty Insurance Association) expressed support for increased disclosure.
On a recorded roll call, the clerk recorded an affirmative vote and the bill was referred to the Appropriations Committee. The chair and members thanked the author for accepting committee amendments; Assemblymember Rodriguez closed by asking for an aye vote.
Votes recorded by the committee at the end of the hearing are summarized in the companion “Votes at a glance” entry for consent items and other bills that were on the agenda this day.
