On the whole, I agree with what Will Quick says.
I do believe that even in niches that others are using comment spam, you CAN outrank them with quality work (I have done it, in fact)... and in the end, you will have a stronger backlink profile that should outlast the spam guys when G- updates roll out in the future (as they always do!).
That said, I strongly agree with Will, in that a sudden change in the style of backlink profile can in fact cause an issue and ranking drop - especially in the mid-long term.
Basically you have just suffered from 1 or 2 things, or both (in my opinion anyway!).
Number 1: You may well be suffering from an inbound link filter/penalty due to the spam. This can be due to spammy links, or over use of a given anchor text (what % of inbound links to the page that was ranking, and also to the domain, use the exact match anchor?). This could be an issue EITHER becuase of the spam links, OR because of over-optimisation of a set keyword (has the ranking suffered for other pages/keyterms???
Number 2: The link velocity to the domain as a whole, and also to the page(s) in question, has probably just taken a MASSIVE drop (by the sounds of it). Such a drastic change in itself can cause issues and ranking drops (in my opinion!). At least in the short to mid term - That said, continued, high quality SEO work 'should' re-gain you those positions, and build a better foundation for the future (safer with future big G updates).
Now, to fix Number 1, above, may take time. I feel that you need to pull off reports of the current anchor text usage to the domain, and to specific pages, and try to ensure that nothing is too 'over the top'. Try to get some nice brand links to water down any high anchor text usages (to page/domain).
To fix Number 2 may be trickier. You could either:
A) Use spam for a while, and decrease it steadily, whilst increasing the quality work (I do NOT recommend this, but that is just because it is not how I like to work, I feel it pollutes the web).
B) Ride it out! - Gain steady, high quality links via press releases, blogger outreach, articles, web 2.0 work, social media baiting. Also consider an increase in PPC in the interim, to keep the $£ coming in! Done right, this should help to regain positions.
C) Do 'B)', above, but also try to be creative in 'simulating' the sort of link velocity that the spammers, perhps some decent infographics with brand links in the embed code, social media baiting, press release syndication, and at a push, mass article submission (with decent quality articles) is still less spammy than blog comments! (although not ideal for long term tactics, it may help to simulate the link velocity). Basically check the amount of extra unique linking domains that the spam work gained the site, and try to get at least somewhere near that level using non-spam tactics, and slowly reduce the amount to a more realistic monthly amount, but with higher quality work.
I think that you should be open with the client, and tell them that although they may suffer now, it is probably much better to do this now than to wait until they get penalised.
This way, they just need to come up with an intelligent strategy to recover, whereas if they kept up with the spam work, they may well end up in real hot water!
**That is just my opinion anyway, and it is without knowing the exact situation, so should be taken as general opinion, not a well researched tactic! **
brevityworks, best of luck!