For any small-business owner, the liability risks associated with data breaches are significant: if customer data you store becomes compromised because of a hacking or fraud incident, you could be responsible for compensating your clients for associated financial losses, for notifying clients about the details of the breach, and for paying damages.
In addition, you’ll probably have to invest money in public relations efforts targeted at restoring your company’s reputation. Together, these costs mount quickly and can spell out serious financial trouble for a small business.
And for law firms, data breaches are an even bigger concern.
How Do Data Breaches Affect Confidentiality Rules?
Thanks to attorney-client privilege laws, law firms must take into account extra considerations when establishing data protection standards. In addition to being held financially liable for losses associated with a data breach, lawyers could face legal discipline or penalties. Why? Two reasons:
- Most states require lawyers to keep client information and communications confidential.
- Many states have laws on the books that make specific provisions for evolving and emerging technology that requires lawyers to take necessary protective steps to shield information, regardless of its digital format.
Because of the potential for law firms to face massive financial penalties if and when they experience a data breach, many banks and lenders demand that lawyers carry Data Breach Insurance (also called Cyber Liability Insurance) in order to qualify for a loan.
But a law firm doesn’t have to be victimized by a data breach to experience digital liability issues.
Beyond Data Breaches: Other Privacy Concerns for Legal Professionals
In addition to data breach concerns, attorneys in private practice and those who run small law firms should consider the risks associated with…
- Social media channels, particularly if marketing efforts on these channels are outsourced.
- Mobile data, including any messages transmitted via smartphone or tablet.
- Email, blogs, and other digital communication channels that can be easily hacked or modified by third parties.
- Interruptions in various hardware and software systems, including those that handle billing.
Managing Data and Risk as a Lawyer
Given the high stakes for data security in a legal setting, attorneys need to be proactive in managing and reducing their exposure to risk. Risk management should include two pieces: reducing the risk exposure a firm faces and putting safeguards in place to handle the fallout of any breaches or incidents. Specifically, law firms can…
- Invest in antivirus software to prevent malicious attacks on customer data.
- Back up data as needed to ensure accessibility.
- Educate employees about confidentiality requirements as well as data security protocol.
- Limit access to sensitive data.
- Invest in a Cyber Liability Insurance policy to cover the costs associated with any data breach or exposure that occurs.