law firm

A group of California trial lawyers is backing a package of bills aimed at policing their industry by ramping up the penalties for attorneys who recruit clients illegally or prioritize the desires of hedge fund investors.

The Consumer Attorneys of California, a prominent trade group, said it is supporting two bills this session meant to crack down on the “small number of bad actors engaged in illegal conduct that threatens to undermine public trust” in the state’s legal bar.

The group said the bills, introduced Monday by Assemblymembers Ash Kalra (D-San José) and Rick Chavez Zbur (D-Los Angeles), were a response to recent Times investigations involving California lawyers. The Times found nine clients within L.A. County’s $4-billion sex-abuse settlement who said they were paid to sue and, in some cases, fabricate claims that became part of the historic payout. Another story examined opaque investor financing arrangements used by some firms.

“We’re not trying to insulate ourselves from accountability,” said Douglas Saeltzer, president of the attorney group, in an interview. “There needs to be consequences.”

The bill introduced by Zbur would disbar any attorney who is convicted of illegally soliciting clients. Kalra’s bill would ban private equity firms and hedge funds from dictating case strategy after giving money to a law firm.

Plaintiff’s attorneys say the legislative push is an attempt to clean up their profession’s image. It comes amid efforts by companies and governments frequently targeted by lawsuits to rein in a barrage of litigation.

Uber is pushing a measure for the November ballot that would limit how much lawyers can collect in fees for car crash cases, encouraging Californians to “stop the billboard lawyer scam.” A coalition of California counties has simultaneously begun circulating language to lawmakers that would limit attorneys’ ability to sue over older sex-abuse cases, pointing to recent allegations of fraud.

Zbur’s legislation, Assembly Bill 2039, would require the State Bar strip the license of any attorney with a felony conviction for a practice known as capping, in which law firms directly solicit or procure clients to sign up for lawsuits. Currently, attorneys convicted of capping can face suspension or probation, but are eligible to keep their license.

Under the bill, the attorney also would be disbarred for a misdemeanor capping conviction if the lawyer “acted knowingly and for financial gain.”

“It really is making very clear that if you’re engaging in this kind of capping, then there’s going to be a consequence,” Zbur said.

All clients who said they were paid to sue L.A. County over sex abuse were represented by Downtown LA Law Group, one of Southern California’s largest personal injury firms. The firm, also known as DTLA, is under investigation by the district attorney, the State Bar and L.A. County.

DTLA has denied any wrongdoing and said its lawyers “operate with unwavering integrity, prioritizing client welfare.”

Zbur’s bill also would provide whistleblower protections to people who report on attorney misconduct and tighten the rules around client loans. California is one of the few states where lawyers can lend money directly to clients.

Other states have barred the practice, concerned that direct loans give an attorney too much leverage over their clients.

The second bill introduced Monday, AB 2305, is aimed at the rising trend of private equity firms and hedge funds lending money to law firms and profiting from the payouts. The Times reported in December that investors were financing some of the flood of sex-abuse litigation against L.A. County.

Supporters of litigation finance say it gives attorneys the funding they need to take on deep-pocketed corporations and represent victims who can’t afford to sue on their own. Critics say investors can secretly sway case strategy, putting their profit before the best interests of a client.

“These Wall Street investors are salivating,” Kalra said. “This is just gonna clearly say, ‘No, no more. We’re not gonna allow these types of investments to influence the practice of law.’”

Kalra’s bill would bar investors from weighing in on litigation, such as who the firm should take on as a client and when they should settle a case. Any contracts that allow investor influence would be void under the law.

It’s unclear how the restrictions would be enforced. It’s often difficult to tell when an investor is financing a firm’s caseload, much less whether they’re exerting influence on a case.

Lawyers already are barred under the State Bar’s rules from allowing a third party to dictate case strategy and are barred in many cases from sharing legal fees with a nonlawyer.

“We’re finding that’s not enough,” Kalra said. “We actually need clear statutory safeguards.”

The California State Bar has charged a founding partner of Downtown LA Law Group, a law firm at the center of a scandal that has embroiled Los Angeles County’s historic sex abuse settlement, with signing up dozens of clients in states where none of the firm’s lawyers were licensed to practice.

The bar charged Salar Hendizadeh, who left the firm this fall, on March 5 with helping one of Southern California’s largest personal injury law firms sign accident victims across the country, despite lacking attorneys who could litigate the cases in other states. Hendizadeh was charged with eleven counts, including deceptive advertising and charging illegal fees.

State Bar Chief Trial Counsel George Cardona said in a statement the allegations, if proved, “represent dishonest and illegal conduct.”

Hendizadeh and a spokesperson for Downtown LA Law Group did not provide a comment Monday.

The firm had roughly 40 clients in Texas, where it operated under the name “Lone Star Injury Law Firm” and branded itself “Texas’s #1 Injury Law Firm,” according to the complaint.

The firm had one L.A.-based attorney licensed to practice in Texas, Darren McBratney, but he left the firm in early 2022. The bar claims the firm refused to remove the attorney’s name from its website for years, ignoring a cease and desist letter from McBratney’s new employer.

Typically, attorneys can take cases in states where they’re not licensed, but they need to partner with local counsel or get permission from the court. In many cases, the bar alleged, DTLA made no effort to do so and left their out-of-state clients in the lurch.

The firm told a Maryland car crash victim her case was worth $1 million and encouraged her to see a California spinal surgeon who charged roughly $300,000 for surgery, according to the complaint. She fired the firm after she got a settlement offer of $160,000 — not enough, she believed, to cover her medical fees, the complaint said.

Attorneys signed up a Tennessee client who was injured at a Nashville rental car business, but the one-year statute of limitations ran out before they filed the case, the bar complaint said. The firm offered to pay for all of his medical bills and one year of physical therapy “as a form of restitution,” according to the complaint.

The charges come as DTLA faces another pending investigation from the State Bar in connection with thousands of sexual abuse lawsuits the firm filed against Los Angeles County, along with a probe from the district attorney’s office. Both have said they are looking into allegations surfaced by The Times last fall that DTLA paid clients to file claims, some of which were allegedly fabricated, that became part of a $4-billion settlement, the largest of its kind in U.S. history. The firm has repeatedly denied all wrongdoing.

The firm was founded by three longtime friends: Daniel Azizi and Farid Yaghoubtil, who are cousins, and Hendizadeh, a friend from elementary school. They began working together in August 2013, the month Hendizadeh got his California bar license, according to the complaint.

The bar complaint charges only Hendizadeh, though it also mentions Yaghoubtil, who shared the responsibility for marketing and client intake, according to the complaint.

The bar says Yaghoubtil repeatedly asked for a referral fee from a woman injured in a Michigan drugstore after she dropped the firm for allegedly taking too long to file her lawsuit. The client had to find her own attorney, the bar said, eliminating the need for a referral fee.

“Why would you tell the lawyers to not pay us a referral fee? That makes no sense.” Yaghoubtil texted the woman on Aug. 16, 2022. “But why not let us get the referral fee? Very sad. Have a nice night.”

At a luncheon this week for L.A. County politicos, Supervisor Kathryn Barger pitched what she framed as a commonsense reform.

Legislators in Sacramento, she argued, need to change a 2019 law that extended the statute of limitations for sex abuse lawsuits, opening the floodgates for decades-old claims that have cost the county nearly $5 billion and counting in payouts.

“I want them in Sacramento to fix it,” she said. “I have to believe that we are the tip of the iceberg.”

The controversial law, Assembly Bill 218, has led to thousands of claims over abuse that took place in schools, juvenile halls and foster homes. Supporters say it continues to give survivors a chance at justice, while Barger and other officials warn the cost of the litigation is driving local governments to the brink of bankruptcy.

Rolling back AB 218, critics argue, is the single most obvious thing state lawmakers can do this legislative session.

The push has gained momentum amid concerns of fraud in the first of two payouts approved last year by L.A. County officials. At $4 billion, it was the largest sex abuse settlement in U.S. history, with the money set aside for more than 11,000 victims.

The Times reported last fall on allegations of fabricated claims filed by plaintiffs within the settlement, which prompted L.A. County Dist. Atty. Nathan Hochman to open an investigation. Hochman told the supervisors this week that his office is reviewing “thousands of claims” for fraudulent submissions and predicted savings in the “hundreds of millions if not billions of dollars.”

Speaking at the event Wednesday, Barger suggested capping attorneys fees — acknowledging that some high-powered attorneys in the room were involved in the county’s litigation.

Out of the $4-billion payout, she said, “about $1.5 billion will go to attorney fees — present company included.”

Barger referenced a former state Assembly speaker known for bare-knuckle tactics, which she said were needed now in the Capitol.

“If Willie Brown were up there, I’m sure he’d lock everyone in a room and slap some sense into them at this point,” she said.

Assembly Speaker Robert Rivas has asked California legislators to consider changes to AB 218. Critics say sexual abuse lawsuits are driving local governments to the brink of bankruptcy, while supporters say it is one of the few ways for victims of abuse to get justice. Rivas spoke in Ventura County on Nov. 18, 2025.

(Myung J. Chun / Los Angeles Times)

This session, Assembly Speaker Robert Rivas has assigned a group of legislators to look at what changes might be made to the law.

A spokesman for Rivas, Nick Miller, said the goal is to provide “meaningful access to justice for all survivors” without forcing service cuts in schools and governments.

“There is a group of members discussing possible solutions that strike the right balance on this critical issue,” Miller said.

It’s a tightrope walk that no legislator has mastered.

Sen. Benjamin Allen (D-Santa Monica), who tried last year to increase the burden of proof for these cases, was branded a protector of predators.

Sen. John Laird (D-Santa Cruz) got further with a pared-down bill only to watch it blow up last session over concerns he was trampling on victims’ rights.

“I worked hard to strike the middle ground,” Laird said. “It just was too hard.”

Organized labor, a powerful voice in Sacramento, could sway the equation. County unions said they were told repeatedly at the bargaining table last year that they couldn’t get raises because of the massive sex abuse settlements, potentially setting them on a collision course with victim advocates.

Lorena Gonzalez, who wrote AB 218 in 2019 before leaving the Legislature to head up the California Federation of Labor Unions, said lobbying firms had been urging unions recently to take the lead on convincing the Assembly to change the law. The union leaders have yet to take a stance, she said.

“Although there’s some desire to especially fix what happened in L.A., there wasn’t an overwhelming desire to roll it back,” she said.

While serving in the state Legislature, Lorena Gonzalez authored AB 218, a state law that extended the statute of limitations for lawsuits over sexual abuse in government facilities. Gonzalez, now with the California Labor Federation, spoke at Balletto Vineyards in Santa Rosa, Calif., on April 26, 2024.

(Jeff Chiu / Associated Press)

A Times investigation last fall found nine clients of Downtown L.A. Law Group, a law firm that represents thousands of plaintiffs in the county’s largest settlement, who claimed that recruiters had paid them to sue. Some clients said they were told to make up stories of abuse that became the crux of their lawsuit.

The firm, also known as DTLA, has denied paying any client to sue. Andrew Morrow, the main attorney on the cases for DTLA, argued in a Feb. 13 court filing that the recent subpoena by the State Bar seeking their court records as part of an investigation into the firm amounted to an “ill-advised fishing expedition.” The firm argued that allowing the State Bar to review its filings violates clients’ privacy.

“No one disputes that these allegations are troubling and, if true, serious,” Morrow wrote. “However, untested allegations printed in a local newspaper — no matter how compelling — do not override the privacy rights” of victims.

Assemblymember Dawn Addis (D-Morro Bay), a longtime advocate for sex abuse survivors who vehemently opposed the last attempt at changing AB 218, said that “there’s all kinds of discussions about potential solutions” for fraud underway in the Legislature.

But limiting victims’ ability to sue, as some have called on lawmakers to do, is a clear no-go, she said.

“Silencing victims is not the way to get out fraud,” she said.

Like many legislators, she pinned some of the blame for the alleged fraud on poor vetting by lawyers for L.A. County. The county has said the cost of taking depositions for more than 11,000 cases would be “astronomical,” and that no records exist for many of the older cases, leaving them defenseless.

In a statement to The Times, a spokesperson for the L.A. County counsel’s office said the Legislature created AB 218 “without a single safeguard against fraud.”

“That is their failure to own,” the statement said. “This is the system the Legislature built, and they need to fix it.”

The county maintains it is not trying to squash victims’ rights, but rather keep vital services — pools, parks, health clinics — open.

“I am tired of whenever a government official stands up and says, ‘Hey, there needs to be some reform here,’ that we’re accused of victim blaming, pedophile protecting,” says Joseph Nicchitta, the county’s acting chief executive.

After agreeing to the $4-billion payout in April, county officials opted into a second $828-million settlement in October covering an additional 400 cases. Since then, more than 5,000 cases have been filed that are not part of either settlement and still need to be resolved.

“Let me tell you what will not work for L.A. County,” Nicchitta said. “The nibbles around the edges — ‘Make the procedure a little tighter, we’ll require a couple more documents.’”

He said he believes the Legislature needs to weigh the need to pay survivors against the obligation to keep the social safety net intact. One solution, Nicchitta said, could involve a victims compensation fund that would eliminate the need for someone to hire an attorney in order to submit a claim and receive money.

“Acknowledge the harm, provide real competition, [and] do it fast,” he said. “You don’t need a lawyer.”

John Manly, a lawyer who has represented sex abuse survivors for more than 20 years, sits at his law office in Irvine on Dec. 29, 2023.

(Allen J. Schaben / Los Angeles Times)

After getting flooded with sex abuse claims related to juvenile facilities following a similar change in the statute of limitations, Maryland capped sex abuse cases against government entities last year at $400,000 and limited attorneys’ fees to 25% for cases resolved in court.

For many California trial attorneys, ideas such as these are nonstarters.

“The reason they’re proposing a victims’ fund is they continue to know that those people don’t have any political power,” said John Manly, a veteran sex abuse attorney who is part of the second L.A. County settlement. “The only power they have is to hire a lawyer and get justice.

“We’re going to fight,” he said.