Subcommittee advances bill to block private‑equity influence over litigation decisions
Assemblymember Calra’s AB 2305 would bar private equity, hedge funds and other corporate lenders from directing litigation strategy or settlement decisions and treats such interference as the unauthorized practice of law; the committee advanced the bill unanimously (12‑0).
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Assemblymember Calra presented AB 2305 to the Senate Judiciary subcommittee, describing a bill that would prohibit corporate lenders — including private equity firms and hedge funds — from controlling or directing litigation decisions. Calra said the measure fills gaps created by modern arrangements such as management service organizations and loans structured to mask investor control. He said the principle is simple: when a person hires a lawyer, litigation decisions should be made by the lawyer and client, not a profit‑seeking nonlawyer investor.
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