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ARTICLE · 06 APRIL 2026

New California Law Prohibits Fee Sharing With Alternative Business Structures

Wilson Elser Moskowitz Edelman & Dicker LLP
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California legislation effective as of January 1, 2026, prohibits California lawyers and law firms from directly or indirectly sharing legal fees with an out-of-state "Alternative Business Structure" (ABS).

United StatesLitigation, Mediation & Arbitration
Carole Buckner
Carole Buckner
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California legislation effective as of January 1, 2026, prohibits California lawyers and law firms from directly or indirectly sharing legal fees with an out-of-state "Alternative Business Structure" (ABS). The new law applies to contracts entered into on or after January 1, 2026. An ABS is any entity other than a nonprofit that provides legal services while allowing ownership or decision making by nonlawyers under Cal. Bus. & Prof. Code § 6156(c). What counts as "decision making" by nonlawyers is not defined within the new law, nor does the new law explain "indirect" fee sharing. An early challenge to the law on constitutional grounds was dismissed after a detailed opinion denying a temporary restraining order.

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