Cloud 9fin Jane’s LME Addiction — Let’s veto that law firm
Oct 7, 2025
Shubham Saharan, a reporter in 9fin's private credit team, dives into the controversial practice of law firm DQ provisions, focusing on how sponsors are targeting particular firms. He discusses the mixed reactions within the market and dissect the ethical implications of restricting counsel choice. Shubham explains different DQ language iterations and raises concerns about potential loopholes, all while exploring whether these provisions truly give sponsors leverage or if law firms will find ways to adapt.
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DQ Clauses Target Lender Coalitions
- Law firm DQ provisions emerged as a targeted response to anti-coalition behavior by certain lender counsel.
- These clauses aim to prevent specific firms from participating in LMEs or restructurings to curb organized lender groups.
Reporting Uncovered Hidden Market Chatter
- Reporters called ~50 people and confirmed seven sources who saw these provisions in market docs.
- Initial secrecy gave way to widespread opinion once the story was aired, showing pent-up reaction.
Two Practical DQ Formulations
- Two main formulations exist: a one-time sponsor veto and an explicit blacklist of firms in credit docs.
- Enforcement typically works via refusal to reimburse legal fees, effectively deterring hires.