You apply, the funding company reviews your claim with your attorney, and if it offers funding you receive a written contract setting out what you will owe. California's Consumer Legal Funding Act, effective January 1, 2026, requires that contract to be in writing and to contain specific disclosures, and gives you a five-business-day right to cancel.
The statute that governs it
California's consumer legal funding rules sit in California Business and Professions Code sections 6250–6256, known as the California Consumer Legal Funding Act. It was added by AB 931 and took effect on January 1, 2026.
The Act does not prohibit consumer legal funding. It sets requirements for how these transactions have to be documented and what a funding company may and may not do.
What the contract has to contain
All consumer legal funding transactions must be codified in a written contract. Among other things, the contract must state the amount to be paid to the consumer, and it must itemize any one-time charges and state what is owed to the funding company on completion of the litigation.
If the contract was negotiated in a language other than English, the consumer must receive a copy in both English and that language.
These are statutory minimums, not a complete description of your agreement. Read your own contract and review it with your attorney.
Your right to cancel
The Act provides a five-business-day cancellation right: the contract terminates if, within five business days after the funding date, the consumer returns all funds disbursed by the funding company.
That window exists so you can take the paperwork home, show it to your attorney, and change your mind without penalty.
What a funding company cannot do
The Act bars consumer legal funding companies from paying or receiving referral fees or commissions with attorneys or law firms, from influencing settlement decisions, and from conditioning funding on a consumer changing counsel.
Your attorney runs your case. A funding company has no say in whether you accept an offer, and anyone who suggests otherwise is describing something the law does not permit.
Where your attorney fits
California requires a written attorney acknowledgment in the consumer legal funding contract, and the contract must require the consumer or the consumer's attorney to notify the funding company of the outcome of the claim.
In practice this means your attorney's office will be involved in the paperwork and in the eventual payoff.
This page describes the statute in general terms and is not legal advice. For how the Act applies to your situation, ask your attorney.
Talk to Green Light
Green Light Legal Funding, LLC is a California consumer legal funding company based in Beverly Hills, serving eligible personal injury plaintiffs with claims pending in California.
Call 310-303-1858 or request funding. There's no cost to ask and no obligation.
More on Pre-settlement funding in California.