AB540 - Civil actions and attorneys.

Amended IN Senate August 21, 2026 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Assembly Bill No. 540 Introduced by Assembly Member Connolly February 11, 2025 An act to amend Section 6155 of the Business and Professions Code, to amend Sections 437c, 1005, and 1010.6 of of, and to add Section 2016.100 to, the Code of Civil Procedure, relating to civil actions. LEGISLATIVE COUNSEL'S DIGEST AB 540, as amended, Connolly. Motions: filing and service requirements. Civil actions and attorneys. (1) Existing law, the State Bar Act, requires the certification of lawyer referral services by the State Bar of California, as specified, and imposes a civil penalty and damages that are recovered in a civil action for a violation of these requirements, as specified. The act excludes certain entities from being considered a lawyer referral service for these purposes. This bill would additionally exclude from being considered a lawyer referral service an individual attorney or a group of individual attorneys practicing together who are actively representing clients for whom they are personally providing legal services, and, incidental to that active representation, refer a potential client to another attorney under specified circumstances. Existing (2) Existing law establishes various requirements and deadlines for the filing and service of prescribed motions in civil actions, including a motion for summary judgment and a motion for judgment on the pleadings, as specified. A notice of motion for summary judgment or motion for judgment on the pleadings must be served on all other parties to the action at least 81 days before the time appointed for hearing, except when the notice is served by facsimile transmission, express mail, or another method of delivery providing for overnight delivery, in which case the required 81-day period of notice must be increased by 2 court days. For prescribed motions other than a motion for summary judgment or a motion for judgment on the pleadings, as specified, existing law requires a notice of such motion to be provided at least 16 court days before the hearing, except when the notice is served by facsimile transmission, express mail, or another method of delivery providing for overnight delivery, in which case the required 16-day period of notice before the hearing must be increased by 2 calendar days. Existing law authorizes the service of documents in a civil action by electronic means pursuant to rules adopted by the Judicial Council, as specified. This bill would clarify that service of a notice of motion described above by electronic service is not among the methods of service requiring an increase to the period of notice. The bill would also make conforming changes. The bill would establish a procedure and timeline to allow a party or non-party in a civil action, upon stipulation, to screen their sensitive medical and personal records for privacy and relevance before the records are provided to a subpoenaing party, as specified. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: NO Local Program: NO Bill Text The people of the State of California do enact as follows: SECTION 1. Section 6155 of the Business and Professions Code is amended to read: 6155. (a) An individual, partnership, corporation, association, or any other nongovernmental entity shall not operate for the direct or indirect purpose, in whole or in part, of referring potential clients to attorneys, and no attorney shall accept a referral of such potential clients, unless all of the following requirements are met: (1) The service is certified by the State Bar of California and is operated in conformity with minimum standards for a lawyer referral service established by the State Bar and approved by the Supreme Court. (2) The combined charges to the potential client by the referral service and the attorney to whom the potential client is referred do not exceed the total cost that the client would normally pay if no referral service were involved. (b) A referral service shall not be owned or operated, in whole or in part, directly or indirectly, by those lawyers to whom, individually or collectively, more than 20 percent of referrals are made. For purposes of this subdivision, a referral service that is owned or operated by a bar association, as defined in the minimum standards, shall be deemed to be owned or operated by its governing committee so long as the governing committee is constituted and functions in the manner prescribed by the minimum standards. (c) None of the following is a lawyer referral service: (1) A plan of legal insurance as defined in Section 119.6 of the Insurance Code. (2) A group or prepaid legal plan, whether operated by a union, trust, mutual benefit or aid association, public or private corporation, or other entity or person, which meets both of the following conditions: (A) It recommends, furnishes, or pays for legal services to its members or beneficiaries. (B) It provides telephone advice or personal consultation. (3) A program having as its purpose the referral of clients to attorneys for representation on a pro bono basis. (4) A nonprofit organization that partners with a referral service as provided in this article. (5) An individual attorney or a group of individual attorneys practicing together, whether in a partnership, corporation, or association, that does not operate, in whole or in part, as a referral service, who are actively representing clients for whom they are personally providing legal services, and, incidental to their active representation of their clients, refer a potential client to another attorney under either of the following circumstances in compliance with the California Rules of Professional Conduct: (A) Refers a potential client to another attorney on a matter that the referring attorney or group of attorneys did not affirmatively solicit and involves an area of the law outside of their expertise but within the area of expertise of the attorney to whom the potential client is referred. (B) Refers a potential client to another attorney on a matter that is within the area of expertise of the referring attorney or group of attorneys, but exceeds their caseload or capabilities or does not meet their criteria for representation. (d) The following are in the public interest and do not constitute an unlawful restraint of trade or commerce: (1) An agreement between a referral service and a participating attorney to eliminate or restrict the attorney’s fee for an initial office consultation for each potential client or to provide free or reduced fee services. (2) Requirements by a referral service that attorneys meet reasonable participation requirements, including experience, education, and training requirements. (3) Provisions of the minimum standards as approved by the Supreme Court. (4) Requirements that the application and renewal fees for certification as a lawyer referral service be determined, in whole or in part, by a consideration of any combination of the following factors: a referral service’s gross annual revenues, number of panels, number of panel members, amount of fees charged to panel members, or for-profit or nonprofit status; provided that the application and renewal fees are reasonable and necessary to cover the cost of the program and established by the State Bar through the rulemaking process. (5) Requirements that, to increase access to the justice system for all Californians, lawyer referral services establish separate ongoing activities or arrangements that serve persons of limited means. (6) Partnerships or agreements between a referral service and a participant’s nonprofit organization to refer potential clients for assistance. (e) With the approval of the Supreme Court, the State Bar shall formulate and enforce rules and regulations for carrying out this section, including rules and regulations which do the following: (1) Establish minimum standards for lawyer referral services. (2) Require that an entity seeking to qualify as a lawyer referral service register with the State Bar and obtain certification from the State Bar. (3) Require that the certificate may be obtained, maintained, suspended, or revoked pursuant to procedures set forth in the rules and regulations. (4) Require the lawyer referral service to pay an application and renewal fee for the certificate in such reasonable amounts as may be determined by the State Bar. The State Bar shall adopt rules authorizing the waiver or reduction of the fees upon a demonstration of financial necessity. The State Bar may require that the application and renewal fees for certification as a lawyer referral service be determined, in whole or in part, by a consideration of any combination of the following factors: a referral service’s gross annual revenues, number of panels, number of panel members, amount of fees charged to panel members, or for-profit or nonprofit status. (5) Require that, to increase access to the justice system for all Californians, lawyer referral services establish separate ongoing activities or arrangements that serve persons of limited means. (6) Require each lawyer who is a member of a certified lawyer referral service to comply with all applicable professional standards, rules, and regulations, and to possess a policy of errors and omissions insurance in an amount not less than one hundred thousand dollars ($100,000) for each occurrence and three hundred thousand dollars ($300,000) aggregate, per year. By rule, the State Bar may provide for alternative proof of financial responsibility to meet this requirement. (7) Establish minimum standards for nonprofit organizations that partner with lawyer referral services. (f) Provide that cause for denial of certification or recertification or revocation of certification of a lawyer referral service shall include, but not be limited to: (1) Noncompliance with the statutes or minimum standards governing lawyer referral services as adopted and from time to time amended. (2) Sharing common or cross ownership, interests, or operations with any entity which engages in referrals to licensed or unlicensed health care providers. (3) Direct or indirect consideration regarding referrals between an owner, operator, or member of a lawyer referral service and any licensed or unlicensed health care provider. (4) Advertising on behalf of attorneys in violation of the Rules of Professional Conduct or the Business and Professions Code. (g) This section shall not be construed to prohibit attorneys from jointly advertising their services. (1) Permissible joint advertising, among other things, satisfies both of the following: (A) The advertisement identifies by name the advertising attorneys or law firms whom the consumer of legal services may select and initiate contact with. (B) Each participating attorney or law firm shall have executed a joint advertising agreement with the entity managing the joint advertising agreement with the entity managing the joint advertising services, under which the attorney or law firm expressly takes liability for the content of the advertising. (2) Certifiable referral activity involves, among other things, some person or entity other than the consumer and advertising attorney or law firms which, in person, electronically, or otherwise, refers the consumer to an attorney or law firm not identified in the advertising. (h) A lawyer referral service certified under this section and operating in full compliance with this section, and in full compliance with the minimum standards and the rules and regulations of the State Bar governing lawyer referral services, shall not be deemed to be in violation of Section 3215 of the Labor Code or Section 750 of the Insurance Code. (i) The payment by an attorney or law firm member of a certified referral service of the normal fees of that service shall not be deemed to be in violation of Section 3215 of the Labor Code or Section 750 of the Insurance Code, provided that the attorney or law firm member is in full compliance with the minimum standards and the rules and regulations of the State Bar governing lawyer referral services. (j) Certifications of lawyer referral services issued by the State Bar shall not be transferable. SECTION 1. SEC. 2. Section 437c of the Code of Civil Procedure is amended to read: 437c. (a) (1) A party may move for summary judgment in an action or proceeding if it is contended that the action has no merit or that there is no defense to the action or proceeding. The motion may be made at any time after 60 days have elapsed since the general appearance in the action or proceeding of each party against whom the motion is directed or at any earlier time after the general appearance that the court, with or without notice and upon good cause shown, may direct. (2) Notice of the motion and supporting papers shall be served on all other parties to the action at least 81 days before the time appointed for hearing. If the notice is served by mail, the required 81-day period of notice shall be increased by 5 days if the place of address is within the State of California, 10 days if the place of address is outside the State of California but within the United States, and 20 days if the place of address is outside the United States. If the notice is served by facsimile transmission, express mail, or another method of delivery providing for overnight delivery, excluding electronic service, the required 81-day period of notice shall be increased by two 2 court days. (3) The motion shall be heard no later than 30 days before the date of trial, unless the court for good cause orders otherwise. The filing of the motion shall not extend the time within which a party must otherwise file a responsive pleading. (4) A party shall not bring more than one motion for summary judgment against an adverse party to the action or proceeding. This limitation does not apply to motions for summary adjudication. (5) Notwithstanding any other provision of this section, on motion or application of any party and a showing of good cause, the court may grant leave for the moving party to bring an additional motion for summary judgment. The moving party shall serve the notice and supporting papers for any such additional motion in accordance with paragraph (2) of subdivision (a). (b) (1) The motion shall be supported by affidavits, declarations, admissions, answers to interrogatories, depositions, and matters of which judicial notice shall or may be taken. The supporting papers shall include a separate statement setting forth plainly and concisely all material facts that the moving party contends are undisputed. Each of the material facts stated shall be followed by a reference to the supporting evidence. The failure to comply with this requirement of a separate statement may in the court’s discretion constitute a sufficient ground for denying the motion. (2) An opposition to the motion shall b [Text truncated for display. Full text available on Congress.gov.]