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Committee backs licensing for commercial lawsuit financers, sends AB 743 to Appropriations
Summary
The Assembly Banking and Finance Committee voted to pass AB 743 as amended, a bill that would require commercial lawsuit financers to obtain licenses from the Department of Financial Protection and Innovation, following broad support from business groups and civil-justice advocates and no recorded opposition at the hearing.
The Assembly Banking and Finance Committee passed AB 743 as amended and referred it to the Assembly Appropriations Committee. The bill would require a person engaged in commercial lawsuit financing in California to obtain a license from the Department of Financial Protection and Innovation (DFPI), maintain a surety bond, and make certain violations subject to civil penalties.
“Lawsuit financing is the most significant development in modern civil litigation,” Jonathan Stroud of Unified Patents told the committee, urging regulatory transparency. “Litigation funding… undergirds huge swaths of U.S. civil litigation today,” he said, describing the industry as large and often opaque and arguing licensing is a “small but important first step.”
Supporters included the California Chamber of Commerce, the California Trucking Association, the Civil Justice Association of California and other business and plaintiff/defense stakeholders who said state-level licensing would increase transparency about third‑party funders and offer protections to counterparties and courts. Chris McCauley of the Civil Justice Association said the bill’s definition and licensing requirements would “shed some light on these litigation funders.”
Roxanne Gould, representing the Alliance for Responsible Consumer Legal Funding, told the committee she and her organization support the bill’s objective but requested clearer definitions to distinguish consumer legal funding from commercial third-party litigation financing.
No witnesses in the hearing registered formal opposition. The committee’s secretary recorded a roll call in which Assemblymembers Valencia, Chen, Dixon, Fong, Krell, Michelle Rodriguez, Blanca Rubio and Thiago Soria were recorded as voting in the affirmative. The committee left the roll open to allow absent members to register votes; the committee statement notes the bill passed and will proceed to Appropriations.
Next steps: AB 743 goes to the Appropriations Committee for fiscal review and further consideration of the DFPI’s rulemaking and enforcement authorities regarding litigation financing.
