Assembly Bill 2305 Advances to Senate After Unanimous Assembly Approval

On April 6, 2026, the California State Assembly passed Assembly Bill 2305 with a bipartisan vote of 68-0. The bill, authored by Assemblymember Ash Kalra, now moves to the Senate for consideration. The legislation focuses on limiting the role of corporate investors in legal decision-making and reinforcing the independence of attorneys and their clients.

Bill Seeks to Limit Corporate Influence in Legal Practice

Assembly Bill 2305 prohibits private equity firms, hedge funds, and other corporate investors from directing or influencing the practice of law. Specifically, the bill ensures that decisions related to litigation, including case strategy, resolution, and representation, remain under the control of licensed attorneys and their clients.

Assemblymember Kalra stated that the bill addresses emerging gaps in oversight. He explained that the measure aims to protect the independence of the legal profession and preserve the integrity of the justice system. He also noted that the legislation reinforces California’s role in setting standards for limiting investor involvement in legal matters.

Background on Industry Changes and Loopholes

Historically, ethics rules have restricted non-lawyer ownership in law firms. As a result, the legal industry has largely avoided private equity investment. However, newer business models have created alternative pathways for investor involvement.

For example, management-service organizations and alternative business structures have structured their relationships with law firms in ways that classify investments as loans. These arrangements allow investors to participate indirectly in legal operations. As a result, concerns have emerged that financial interests could influence litigation decisions, including whether to file a case, how to resolve it, or what strategy to pursue.

AB 2305 addresses these concerns by establishing a blanket prohibition on investor influence over legal practice.

Support From Consumer Attorneys of California

The Consumer Attorneys of California sponsored the bill. Doug Saeltzer, the organization’s president, stated that the Assembly’s vote reflects a commitment to accountability within the legal profession. He added that the legislation represents a step toward strengthening protections for Californians and providing enforcement tools against misconduct.

Saeltzer also emphasized that the organization supports applying consistent standards across institutions, including within the legal field. He acknowledged Assemblymember Kalra’s leadership and confirmed continued efforts to advance the bill through the legislative process.

Legislative Details and Next Steps

Assembly Bill 2305 is coauthored by Assemblymembers Stefani and Zbur. Following its passage in the Assembly, the bill will proceed to the California State Senate for further review.

About Assemblymember Ash Kalra

Assemblymember Ash Kalra represents California’s 25th Assembly District, which includes most of San José and parts of southeast Santa Clara County. First elected in 2016, he became the first Indian American to serve in the California Legislature. He was re-elected to his fifth term in 2024.

Kalra currently serves as Chair of the Committee on Judiciary. He also holds positions on the Housing and Community Development, Labor and Employment, Natural Resources, and Utilities and Energy committees.