Hackers, Spies, and Stolen Secrets: Protecting Law Firms from Data Theft

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Table of Contents
  I. THE GROWING THREAT TO CONFIDENTIAL LEGAL RECORDS
 II. OBSTACLES TO DATA SECURITY AT LAW FIRMS
     A. Invisibility of the Theft
     B. Differential Motivation
     C. Security Is Expensive and Inconvenient
     D. Cultural Obstacles
III. CURRENT RULES ON DATA SECURITY
     A. Legislation
     B. Professional Standards on Safeguarding Client
        Information
     C. Professional Standards on Disclosure of Data Theft
 IV. METHODS OF IMPROVING CYBERSECURITY AT LAW
     FIRMS
     A. Government-Mandated Defensive Measures
     B. Liability Regimes and Private Causes of Action
     C. Professional Standards Requiring Basic Security
        Practices
     D. Professional Standards Requiring Disclosure of Data
        Theft
     E. System of Accreditation or Certification for Information
        Security
V. CONCLUSION

I. THE GROWING THREAT TO CONFIDENTIAL LEGAL RECORDS

Cyberattacks are increasingly targeting lawyers, and the legal profession must respond more energetically to the threat than it has to date.

Recent years have seen a substantial increase in both hacking and industrial espionage conducted online, at tremendous cost to the victims and the national economy. (1) U.S. officials estimate that American companies lost $50 billion in 2009 alone due to cyber-espionage, (2) and some analysts estimate that the worldwide losses due to hacking exceed $1 trillion. (3) The Director of the FBI believes that "the cyber-threat ... will be the number one threat to the country" in the future, surpassing even terrorism. (4)

The increasing number of data theft and espionage incidents in cyberspace has been widely reported, (5) and law firms have become particularly attractive targets. one data security company reports that 10% of the advanced cyberattacks it investigated in the past 18 months were targeted at law firms. (6)

The risks to law firms are increasing for several reasons. First, computer-savvy intruders are drawn by the quantity and quality of documents available in law offices, routinely including investment plans, negotiation positions, business strategies, descriptions of technical secrets, and due diligence material on financing, transactions, and mergers. (7) Infiltrating attorneys' computer systems is an optimal method of obtaining sensitive material because "[l]aw firms have a tremendous concentration of really critical, private information," explains Bradford Bleier of the FBI's cyber division. (8) Large law firms routinely hold privileged and sensitive documents worth millions of dollars to foreign intelligence services. (9) Second, law firms often have worse data security than their clients. "It's possible the information comes from a very secure source, a company with very good security. Then it goes to a law firm, and who knows what kind of security they are going to have," says Lucy Thompson, chair of the American Bar Association's Section of Science and Technology Law. (10) Third, data thieves may choose law firms as targets in order to filter out low-value material. Large corporations routinely store so much digital data that an intruder may have trouble sorting the wheat from the chaff; however, a corporation's outside counsel receives and stores a much smaller set of documents, carefully selected for their importance and relevance. (11)

Clients depend upon attorneys to keep their secrets. In order to obtain legal advice, a client will often have to reveal valuable data, future plans, harmful evidence, and embarrassing facts. If the client cannot trust that the information will remain private, he or she may hesitate to obtain legal advice at all. Thus, there is a longstanding professional tradition that people should be able to seek legal advice with confidence that their secrets will not be exposed. (12) Today poor data security is eroding that confidence. In 2011, the hacker collective "Anonymous" stole law firm files concerning the defense of a U. …