United States: Cybersecurity, Part 3: Identifying Solutions

Cybersecurity issues are constantly evolving. Indeed, even since the first article in this series was published, it was announced that plaintiffs law firm Edelson PC has already filed a privacy class action lawsuit against a law firm, alleging that the defendant firm failed to engage in effective cyber techniques and, thus, failed to maintain confidential data.

Just as it appears that law firms may be the next target of hackers, it also appears that the risk of lawsuits by current and former clients as a result of a firm's cybersecurity policies is greater than ever.

The first and second articles in this series addressed the scope of the rising cybersecurity problem and some of the common mistakes that law firms make in addressing the problem. This final article in the series will answer two of the questions most often asked by law firms: What specific steps can a law firm take to protect its data? What can it do if the information is nonetheless accessed or stolen?

There is no "one size fits all" solution for firms, and policies for effective cybersecurity will vary by firm. However, many approaches include the development of a cybersecurity plan that is composed of two parts: (1) a Cyber Risk Management Plan to reduce the risk of a cybersecurity problem before it happens; and (2) a Cyber Incident Response Plan that includes protocols and practices for addressing a cybersecurity breach after the fact.

Develop a Cyber Risk Plan

The best time to take steps to reduce the risk of a breach is before a cyber breach happens. After all, once the toothpaste is out of the tube, so to speak, it is too late. A risk management plan helps reduce the likelihood of an incident occurring.

A cybersecurity plan does not solely focus on cyberspace. Law firms should also be aware of physical security issues, by taking steps to limit access to physical servers, so that only those that need to access them can.

Another example of a step that law firms can take to minimize the risk of a data breach is to develop protocols to protect information on mobile devices, such as smartphones and laptops. As mentioned previously, mobile devices are easy to lose and can provide access to confidential information to anyone with the mobile device in hand. Thus, law firms might want to limit access to such devices so that they can only be accessed, if the device requires a password that is changed regularly, or consider the use of remote-wiping, which allows a firm to remove all data or confidential information on a device that is lost or stolen.

There are other policies that work for some firms but do not make sense for others. For example, some firms have adopted a policy banning BYOD ("bring your own device"), such that any computer or mobile device used for personal purposes may not also be used to access work email or programs. Others implement special procedures for the use of laptops or mobile devices by personnel traveling to areas the firm has identified as a "high risk" zone, such as China or Russia. Still other firms require security scanning of storage devices, such as a thumb drive or a CD, before they are used on law firm systems.

Another important risk management tool relates to third party vendors. One of the highest profile cyber breaches in recent years was the Target breach, which occurred through one of Target's refrigeration vendors who was connected to Target's network. This cautionary tale shows that a law firm is only as secure as its weakest vendor.

Because law firms routinely use third party vendors for litigation support, human resources and more, firms should attempt to ensure that those vendors agree to and comply with the firm's own security requirements. Firms also may require that vendors notify the firm of a breach or assist with the investigation and resolution. Firms may attempt to include indemnify or hold harmless provisions in its vendor agreements.

Cyber Incident Response Plan

If a law firm is unsuccessful in preventing a cybersecurity breach, it will be most prepared to address such a breach, if it has developed a breach response plan in advance. Even firms that devote significant resources to preventing breaches must be prepared to respond should a breach occur.

Often, law firms believe that cyber incidents should be reported to the head of IT so that the IT team can handle the incident as they deem appropriate. However, a firm addressing a potential breach of confidential data might have obligations under the Rules of Professional Conduct, federal, state or European Union regulations, common law, contract or client engagement agreements.

A firm's incident response plan, often written by counsel in conjunction with the IT department, should include several aspects.

First, a plan may identify the person within the law firm to whom a potential incident should first be reported (often the general counsel). In firms without a designated GC, a breach can be reported to someone with authority to contact and engage outside counsel. The plan also might designate the chain of command for incident response and who will make decisions on reporting obligations and next steps.

The plan also should contain information about the firm's computer networks and servers, including their physical locations and the types of information stored on them. That information will facilitate immediate implementation of an internal investigation, which will help determine the scope of the breach and appropriate remedial steps. The plan also should ensure that investigations are conducted in a manner that will preserve evidence (and protect the privilege, if applicable) and include a policy for deciding whether to involve law enforcement to assist in the investigation or pursue criminal charges against the hackers.

An incident response plan also should have notification and reporting policies for deciding whether to disclose the incident to affected firm employees, firm clients and other individuals whose personal information was accessed, as well as to state and federal regulators. Identifying whom to notify and when depends on several factors, including what data was accessed, who was affected, where the affected parties live and what type of breach occurred. It also might necessitate the involvement of public relations or media specialists.

Finally, the plan should address whether to hire outside counsel to handle the internal investigation and provide advice. This approach is generally recommended, as outside counsel provides credibility, serves to cloak discussions in the attorney-client privilege and protect them from disclosure and can assist in the event of a claim alleging a failure to adequately safeguard client data or appropriately respond to the cyber incident.

It also bears repeating: Some of the steps associated with implementing the cyber plan may be defrayed by insurance. Just last month, the Fourth Circuit Court of Appeals found coverage for cyber claims under general liability insurance policies. However, other courts have found that there is no coverage in GL policies unless the firm "publishes" the private information at issue (as opposed to hackers doing so), suggesting that purchasing a specific cyber policy is the safer approach.

There is no definitive answer. However, the ABA Standing Committee on Lawyers' Professional Liability recently published a cyber resource for attorneys and firms: "Protecting Against Cyber Threats: A Lawyer's Guide to Choosing a Cyber-Liability Insurance Policy." It is available on the ABA website.

Cybersecurity is an issue that all firms need to consider and address. A good defense is the best offense to help ensure that firms protect themselves, their clients and their employees.

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

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