Litigation panel managers at P&C insurance carriers are increasingly focused on the cybersecurity practices followed by panel counsel law firms. This article reviews recent law firm data breaches and identifies industry best practices for panel counsel cybersecurity.

Law Firm Cybersecurity Attacks

Cybersecurity attacks targeting law firms have been increasing in numbers and severity in recent years. Law firms are particularly vulnerable to attack because they often store large amounts of sensitive data, such as client records, financial information, and intellectual property.

While it may be comforting to think, “this won’t happen to me,” the fact is that law firms of all sizes experience cyber attacks. Some recent attacks are highlighted below.

  • Cadwalader, Wickersham & Taft, the “oldest continuously operating law firms in the U.S.,” was the target of a cyber attack in November 2022 that interrupted law firm operations for its 400+ attorneys. The law firm responded by taking many systems offline for days or weeks and cleaning many of the firm’s hard drives. Email systems were also disrupted, interfering with client communications and case management. The irony is that Cadwalader maintains a Cyber Security and Data Privacy practice.
  • Proskauer Rose suffered a data breach in April 2023 when a vendor hired to maintain an information portal on the firm’s cloud system failed to provide proper data security. The incident presented a risk that exposed client data, including legal and financial documents.
  • In early 2023, a New Jersey law firm representing Uber reported that its computer systems were attacked. Personal data on Uber drivers, including names and Social Security numbers, was exposed.

Panel Counsel Cybersecurity Recommendations

Recommended steps that law firms can take to protect themselves from cybersecurity attacks include the following:

  • Cybersecurity Defenses. Firewalls, intrusion detection systems, multi-factor authentication, and data encryption can help to protect against malware and other cyber attacks.
  • Employee Education. From attorneys to paralegals and other support staff, regular training on email security, password protection, and the confidential treatment of sensitive client files can help to maintain vigilance among team members.
  • Data Backups. A strong backup system forms the foundation for any data security program. Redundancy in data storage, including offsite management, can play an important role in quickly restoring any data that may be at risk.

By taking these actions, law firms can minimize their risk from cybersecurity attacks.

Implications for Panel Counsel Law Firms

Panel Counsel CybersecurityPanel counsel law firms of all sizes should closely and continuously monitor their data management practices. Just as a law firm might (should) have a written diversity policy, it would benefit from also having a written description of its cybersecurity practices. At a minimum, this overview of cybersecurity can be available for use in RFPs and on request by litigation panel managers at insurance companies or self-insured entities.

Law firms that have taken the extra step to purchase a cybersecurity insurance policy can use this as a competitive advantage. The cyber insurance coverage will demonstrate that the law firm has a proactive commitment to data privacy, while also documenting that some type of data audit has been conducted.

The use of an independent IT third party can also help to maintain consistency in data backup and cybersecurity practices. This will allow the managing partner and members of the law firm executive committee to address the cyber issue appropriately while also freeing up their time to focus on law practice management and client interaction.

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