California capping law penalties could soon become significantly tougher, with attorneys who use brokers to illegally recruit clients facing disbarment and fines of up to $25,000 per violation.
The California Legislature recently passed AB 2039, a bill aimed at cracking down on the illegal practice commonly known as “capping.” The measure is now awaiting Gov. Gavin Newsom’s signature.
Under existing California law, attorneys involved in capping can face misdemeanor charges or, in certain circumstances, felony prosecution. AB 2039 would significantly increase the consequences by requiring attorneys found to have engaged in capping to lose their law licenses.
The bill would also impose fines of up to $25,000 per violation.
What Is Capping and How Does It Work?
Capping generally involves a broker, agent or other intermediary approaching potential clients on behalf of an attorney or law firm and steering them toward a particular lawyer.
The practice can occur at accident scenes, hospitals, jails and other places where people may be in need of legal representation. Brokers may approach potential clients directly and encourage them to hire a specific attorney in exchange for compensation or other benefits.
The practice has also surfaced within California’s Korean American legal community, according to attorneys interviewed by the Korea Daily.
In some cases, brokers or law office managers allegedly secure cases first and then connect clients with attorneys. Others may obtain information about an accident and approach victims before referring them to a specific lawyer.
Accident Victims Can Become Targets
Capping is particularly common in personal injury cases involving traffic accidents, attorneys said.
Brokers may obtain accident information through towing companies, insurance agents or other sources before contacting victims. In other cases, they may visit injured patients at hospitals or appear at accident scenes to encourage victims to retain a particular attorney.
Personal injury and lemon law attorney Misu Choi said brokers sometimes attempt to gain victims’ trust immediately after an accident.
“At an accident scene, a broker might tell a victim, ‘I’ll testify that the accident wasn’t your fault,’ and then encourage that person to hire a lawyer the broker knows,” Choi said.
Attorney Chanyong Jung said capping is not uncommon in Koreatown.
“There are cases where an office manager directly hires brokers, obtains cases and then connects them with attorneys,” Jung said. “Some attorneys who don’t have many clients or their own referral networks also rely on brokers to bring in cases.”
Brokers Can Receive a Cut of Attorney Fees
The financial incentives behind capping can be substantial.
According to attorneys familiar with the practice, brokers can receive around 10% of an attorney’s fee in exchange for bringing in a case.
For lawyers handling potentially lucrative cases, paying a 10% referral fee can still leave significant profits, creating an incentive for capping to continue despite existing restrictions.
AB 2039 is intended to change that calculation by dramatically increasing the consequences for attorneys who participate in capping.
Another reason the practice has persisted is the difficulty of detecting it.
Attorney Seungho Lee said transactions between lawyers and brokers typically occur behind closed doors, making enforcement challenging.
“Because the transactions between attorneys and brokers are conducted privately, it’s virtually impossible for authorities to discover them unless someone involved reports it or there is a whistleblower,” Lee said.
If signed into law, AB 2039 would significantly strengthen California’s penalties for capping, potentially putting attorneys’ careers — not just their wallets — at risk.
