Navigating Risk in a Shifting Economy: Legal Considerations for Tax, Litigation, and M&A.

As the economic and regulatory landscape continues to evolve, businesses are facing a convergence of financial uncertainty, regulatory scrutiny, and strategic opportunity. For clients operating at the intersection of federal tax law, litigation, and mergers and acquisitions, understanding how these forces interact is critical to making informed decisions and mitigating risk. At Spizzirri Law, we believe that legal strategy must be proactive, not reactive. Recent developments in economic forecasting, fund classification, and product safety regulation offer valuable insights into how businesses can stay ahead of the curve.

Economic Forecasts: Tax Implications and Strategic Timing

According to a recent issue of The Kiplinger Letter, the U.S. economy—while resilient in the wake of the pandemic—faces mounting headwinds. Inflation remains elevated, interest rates are rising, and GDP growth is expected to slow to around 2%. For businesses, this environment demands a reassessment of tax strategies.

Higher borrowing costs and tighter capital markets may impact the timing of capital investments, debt restructuring, and asset acquisitions. Our tax attorneys work closely with clients to optimize deductions, manage interest expense limitations under IRC §163(j), and structure transactions to preserve liquidity and minimize tax exposure.

In the M&A context, economic slowdowns often create favorable conditions for strategic buyers. Depressed valuations and motivated sellers can lead to attractive acquisition opportunities—provided the tax implications are carefully managed from the outset.

Fund Composition: Regulatory Risk and Transactional Due Diligence

Axa Capital’s recent guidance on fund diversification underscores the legal significance of portfolio structure. Funds that invest more than 30% of their assets in a single security or more than 25% in one industry are considered non-diversified or concentrated, respectively. These classifications carry heightened regulatory and litigation risk.

For clients involved in fund formation or acquisition, these distinctions are not just academic—they influence everything from SEC disclosure obligations to fiduciary liability. During M&A due diligence, our team evaluates fund composition to identify potential compliance gaps, assess exposure, and structure indemnities accordingly.

Product Safety and Regulatory Litigation: Lessons from PPA and Caffeine

The FDA’s evolving stance on substances like phenylpropanolamine (PPA) and caffeine illustrates how scientific research can reshape regulatory expectations—and trigger litigation. In the case of PPA, initial findings in the late 1970s suggested no link to stroke, but a 2000 Yale study prompted the FDA to issue a public health advisory and request product reformulations.

Similarly, caffeine has come under scrutiny for its effects on children and pregnant women. Regulatory bodies such as the WHO and AAP have issued consumption guidelines, and companies marketing energy drinks or supplements must now navigate a patchwork of evolving standards. For businesses in the consumer goods or healthcare sectors, these developments highlight the importance of proactive compliance and risk management. Our litigation team defends clients in product liability cases and advises on regulatory strategy to minimize exposure before issues escalate.

Turning Risk into Opportunity

In today’s environment, legal risk is not confined to the courtroom—it’s embedded in every business decision. Whether you’re structuring a deal, launching a fund, or defending a product, the key to success lies in anticipating challenges and acting decisively. At Spizzirri Law, we help clients navigate complexity with clarity. Our integrated approach to federal tax law, litigation, and mergers and acquisitions ensures that your legal strategy is aligned with your business goals—today and into the future.

Thanks for reading.

MD

Reference: The Kiplinger Letter: Forecast for Executives and Investors- Vol. 102, No. 23