Legal tech · Industry brief

California Governor Gavin Newsom signed legislation (AB 2305) into law on September 20, 2026, effective January 2027, barring private equity, hedge funds, and litigation funders from directing or influencing law firms they back. The law targets alternative business structures and management service organizations that facilitate non-lawyer investment in the legal sector, though it preserves non-recourse litigation finance provided funders do not interfere with law practice. According to Philippa Balestrieri, a corporate M&A partner at Holland & Knight specializing in legal industry investment structures, the measure restates existing regulatory concepts governing MSOs rather than fundamentally restricting the market. (Source: Bloomberg Law)

California Governor Gavin Newsom signed Assembly Bill 2305 into law, adding restrictions to the Business and Professions Code that prohibit corporate legal funders from interfering with attorney independence in litigation practices. The law defines "corporate legal funder" as any business entity whose primary purpose involves raising or managing capital and maintaining ownership, service, financing or management relationships with litigation practices, and treats funder interference with attorney professional judgment on substantive litigation matters as unauthorized practice of law. Prohibited conduct includes directing client selection, dictating engagement terms, steering litigation strategy or settlement decisions, controlling discovery, and influencing appellate timing or tying financial incentives to case outcomes. The statute places significant contractual restrictions on litigation practices and their funders, rendering void any provisions that enable unauthorized practice, bar attorney withdrawal when interference occurs, or penalize disclosure of funder interference. A narrow safe harbor permits nonrecourse litigation funding arrangements provided they meet specific statutory conditions including capped returns and restrictions on use of funds for client solicitation. The law takes effect January 1, 2027, for new contracts; violations subject attorneys to State Bar discipline and clients to statutory damages of $10,000 per violation or treble actual damages, plus attorneys' fees and injunctive relief. (Source: Holland & Knight legal alert)

A&O Shearman advised Advance Intelligence Group Limited on the sale of a controlling 60% equity interest in Atome Financial to Grab Holdings Limited for USD1.49 billion in cash, representing one of Southeast Asia's most significant fintech transactions. The deal, expected to close by Q3 2027 subject to regulatory approvals, required coordinating across five regulatory regimes spanning Singapore, Malaysia, the Philippines, Indonesia, and Thailand, with a two-tranche acquisition structure incorporating performance-based valuation mechanics for the remaining equity interest.