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Law Firms: How Are You Securing Your Clients’ Information?

Posted in All Things E, Data Privacy, Data Security, Vendor Management

What are law firms doing to protect their clients’ sensitive information?  What are clients doing to determine whether their outside counsel are using reasonable security measures to protect their sensitive information (confidential communication, customer data, financial information, protected health information, intellectual property, etc.)?

According to the data forensic firm Mandiant, at least 80 major law firms were hacked in 2011 by attackers who were seeking secret deal information.  The threats to law firms are real and are publicly documented.  In 2011, during the conflict in Libya, law firms that represented oil and gas companies received PDF files purporting to provide information about the effect of the war on the price of oil.  These documents contained malware that infected the networks of the firms that received them.  Similarly, law firms can be a target of political “hacktivism”, as was the case of a law firm that was attacked by Anonymous after representing a soldier in a controversial case, resulting in the public release of 2.6 gigabytes of email belonging to the firm.  And, of course, law firms are just as susceptible to the same risks as other companies when it comes to employee negligence (e.g., lost mobile devices containing sensitive information), inside jobs (misusing access to sensitive information for personal gain), and theft of data.

With these threats in mind, it is useful for lawyers to remember that they have a number of ethical responsibilities to secure their clients’ information, in addition to important business interests.

The Ethical Obligations

Duty to be competent – lawyers cannot stick their heads in the sand when it comes to technology.  They have an ethical obligation to understand the technology they use to secure client information, or they must retain/consult with someone who can make them competent.  As the Arizona Bar stated in Opinion 09-04 (Dec. 2009), “[i]t is important that lawyers recognize their own competence limitations regarding computer security measures and take the necessary time and energy to become competent or alternatively consult available experts in the field.”

Duty to secure – lawyers have an obligation under Model Rule of Professional Conduct 1.6(c) to “make reasonable efforts to prevent the inadvertent or unauthorized disclosure of, or unauthorized access to, information relating to the representation of a client.”  Because the model rule was only recently adopted by the ABA, there is no easy definition of “reasonable efforts”, but Comment 18 to Rule 1.6(c) requires consideration of several factors:  (1) the sensitivity of the information; (2) the likelihood of disclosure if additional safeguards are not employed; (3) the cost of employing additional safeguards; (4) the difficulty of implementing the safeguards; and (5) the extent to which the safeguards adversely affect the lawyer’s ability to represent clients.  The Arizona Bar’s 09-04 opinion again provides some helpful details:  “In satisfying the duty to take reasonable security precautions, lawyers should consider firewalls, password protection schemes, encryption, anti-virus measures, etc.”  The Arizona Bar rightfully recognized, however, that the duty “does not require a guarantee that the system will be invulnerable to unauthorized access.”  Also, what are considered “reasonable efforts today” may change, as an opinion of the New Jersey Advisory Committee on Professional Ethics pointed out when it expressed reluctance “to render a specific interpretation of RPC 1.6 or impose a requirement that is tied to a specific understanding of technology that may very well be obsolete tomorrow.”

Duty to update – the duty to secure client information is not static; it evolves and changes as technology changes. Arizona Bar Opinion 09-04 is again helpful:  “technology advances may make certain protective measures obsolete over time . . . [Therefore,] [a]s technology advances occur, lawyers should periodically review security measures to ensure that they still reasonably protect the security and confidentiality of the clients’ documents and information.”

Duty to transmit securely – lawyers have an obligation to securely transmit information.  For example, the ABA requires that “[a] lawyer sending or receiving substantive communications with a client via e-mail or other electronic means ordinarily must warn the client about the risk of sending or receiving electronic communications using a computer or other device, or e-mail account, where there is a significant risk that a third party may gain access.”  One example is where a lawyer represents the employee of a company and the employee uses her employer’s email account to communicate with her attorney – in that instance, the attorney should advise his client that there is a risk the employer could access the employee’s email communications.

Duty to outsource securely – Model Rule of Professional Conduct 5.2 states that “a lawyer retaining an outside service provider is required to make reasonable efforts to ensure that the service provider will not make unauthorized disclosure of client information.”  ABA Formal Opinion 95-398 interprets this rule as requiring that a lawyer ensure that the service provider has in place reasonable procedures to protect the confidentiality of information to which it gains access.  The ABA recommends that lawyers obtain from the service provider a written statement of the service provider’s assurance of confidentiality.  In an upcoming blog post I will write about a Florida Bar Proposed Advisory Opinion that provides guidance on how lawyers should be engaging cloud computing service providers, which is an emerging trend in the practice of law.

Duty to dispose securely – lawyers also have an obligation to dispose of client information securely.  This is not as much an ethical duty as a legal obligation to do so.  Many states have data disposal laws that govern how companies (law firms are no exception) should dispose of sensitive information like financial information, medical information, or other personally identifiable information.  Examples of secure disposal include shredding of sensitive information and ensuring that leased electronic equipment containing sensitive information on hard drives are disposed of securely.  In one instance, the Federal Trade Commission fined three financial services companies that were accused of discarding sensitive financial information of their customers in dumpsters near their facilities without first shredding that information.  An example of an unnoticed machine that usually stores sensitive information is the copy machine, many of which have hard drives that store electronic copies of information copied by the machine.  Fortunately, the FTC has provided a useful guide to minimize some of these risks.

The Legal Obligations

The ethical obligations discussed above are separate from any legal obligations that govern certain types of information under HIPPA/HITECH, Gramm-Leach-Bliley, the Payment Card Industry’s Data Security Standards, state document disposal laws, state data breach notification laws, and international data protection laws.  Depending on the type of information the law firms collect, those laws may impose additional proactive requirements to secure data, train employees, and prepare written policies.

The Business Interests

Finally, even if the ethical and legal obligations to secure sensitive information do not provide sufficient incentives for law firms to evaluate their security measures with respect to client information, there are business interests that should compel law firms to do so.  Companies are recognizing the risks presented by sharing sensitive information with service providers like law firms and are, at a minimum, inquiring about the security safeguards the providers have adopted and, in some cases, are requiring a certain level of security and auditing that level of security.  One such example is Bank of America.  According to a recent report, following pressure from regulators, Bank of America now requires its outside counsel to adopt certain security requirements and it is auditing the firms’ compliance with those requirements.

Specifically, Bank of America requires its outside counsel to have a written information security plan, and to follow that plan.  Firms must also encrypt sensitive information that Bank of America shares with the firms.  Bank of America also wants their law firms to safeguard information on their employees’ mobile devices.  Most importantly, law firms must train their employees about their security policies and procedures.  Finally, Bank of America is auditing their law firms to ensure they are complying with these requirements.

So with these threats, ethical responsibilities, and business interests in mind, it is important that law firms, like all other companies that handle sensitive information, evaluate their administrative, technical, and physical safeguard to minimize the risks associated with their storage, use, and disposal of their clients’ sensitive information.

 

DISCLAIMER:  The opinions expressed here represent those of Al Saikali and not those of Shook, Hardy & Bacon, LLP or its clients.  Similarly, the opinions expressed by those providing comments are theirs alone, and do not reflect the opinions of Al Saikali, Shook, Hardy & Bacon, or its clients.  All of the data and information provided on this site is for informational purposes only.  It is not legal advice nor should it be relied on as legal advice.

  • http://logikcull.com/ Andy Wilson (logikcull.com)

    Great article Al. This should be required reading at every senior partner meeting.