This is an uncertain time for Big Law practices that piled into the SPAC craze in the past two years, writes Bloomberg columnist Roy Strom.
SPACs became so popular after years in financial obscurity that regulators are now scrutinizing them.
The SEC last week proposed new rules that could put law firms, investment banks and other advisers on the hook for the lofty projections SPACs have used that aren’t allowed for traditional IPOs.
Citibank will pause new SPAC IPOs, citing uncertainty around legal liability the new rules impose on underwriters.
Douglas Ellenoff, a lawyer who helped design the current structure of SPACs, participated in a call this week with more than 60 lawyers—mostly from large firms—to ponder the future of the once red-hot blank check market.
The lawyers discussed how to protect their clients in what is expected to be a heated debate over the proposed rules. The “subtext,” Ellenoff said, was whether law firms would face any liability or reputational harm by staying in the market. Read more.
