
The Legal Risks of Cyber Theft
With the rising number of cyber thefts in the US, numerous lawsuits have been filed against businesses and organizations. In general, the public expects that their bank will take sufficient action to stop data theft. We expect this of the federal government, credit card companies and retail stores as well. Citizens believe that most of the large companies we all do business with will take every precaution to protect our personal and financial data.
It’s only natural that the many serious data breaches at places like Experian and JP Morgan Chase have rattled the public’s trust. Even law firms haven’t been completely exempted from these attacks. In 2015, Law360 reported that one in four law firms had experienced some type of security breach. Though this represents a serious threat in terms of the legal and financial implications, almost half of all law firms surveyed that same year said they didn’t have a data breach response plan in place.
The High Cost of Breaches
In the last few years, data breaches have become so prevalent that it’s almost commonplace to hear that a favorite department store has been breached. In the healthcare industry, it’s estimated that a data breach in America costs more than 2 1/2 times the global average. At $380 per record, healthcare data breaches threaten us all in more ways than we know. The same is true in the legal industry.
A lawyer has a great deal of personal and private information about each client. This might even include information that could lead to the client’s arrest. In America, whatever you say to your doctor, lawyer or priest is still protected under the law. But what if those confidential documents end up being placed online by cyber thieves? Information like this can ruin someone’s life, their business, or their marriage—And it can be painfully embarrassing to the law firm that allowed the breach to occur.
An annual report sponsored by IBM and completed by the Ponemon Institute measures the impact of data breaches. Their report concludes that having a sound data-breach response plan in place can reduce the overall cost by as much as 28 percent. Though this is good news, the legal industry must measure costs other than financial. Their reputation is compromised once a data breach occurs. People need to trust their lawyer. If you hear that a law firm you’ve done business with has recently experienced a cyber breach, how likely are you to continue doing business with this firm?
Other Effects of Cyber Breaches
Learning that all your personal information is in the hands of thieves on the other side of the world causes a significant change in the behavior of consumers. One study found that consumers who learned of a data breach at their favorite retail store cut back on purchases from that retailer. With over 1,500 data breaches taking place in 2017, consumers responded in this way:
- 84 percent said they might not consider doing business with a retailer who had experienced a data breach.
- 57 percent of holiday shoppers felt that identity theft and data breaches would be a significant threat during the holiday season.
- Four in 10 consumers said they believe businesses aren’t doing the best they can to protect us.
- 38 percent said they weren’t sure all companies were doing everything possible to stop data breaches.
- Restoring brand reputation: 29%
- Lost productivity: 21%
- Revenue losses: 19%
- Digital forensics: 12%
- Technical support: 10%
- Compliance & Regulatory: 8%