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Originally posted in The Harvard Law Record April 18, 2020
In a more distributed, yet interconnected world, the notion of the court system as a physical entity continues to diminish. Perhaps a virtual court has a further global reach than a brick-and-mortar facility, but this emerging reality also brings serious questions. This includes questions around the role of a primary court figure – the lawyer – and whether new technologies like artificial intelligence, diminish the role of the lawyer, or simply force an evolutionary progression towards new services and new revenue opportunities.
Annual spending on legal technology more than quadrupled from the prior year to $1 billion in 2018, with $362 million spent acquiring emerging technology based on artificial intelligence. This financial growth provides fertile grounds for legal technology vendors, and forces law firms to compete using technology as a competitive differentiator.
This drive amplifies the Red Queen Effect: the notion that law firms (and any business for that matter) must constantly adapt to survive, and vendors likewise compete through innovation. This means a never ending flow of new features, new approaches and new business models.
While invigorating, this self-feeding tech frenzi creates a petri dish ideal for the growth of misuse and abuse of these emerging technologies and new processes. Rapid change sometimes limits understanding and introduces risk into the ecosystem. Yet this ‘leap before looking’ approach dominates when business requirements force adoption as a means of survival.
A simple example is the data breach at Wells Fargo that occurred when an attorney accidentally released the personally identifiable data (PII) of wealthy clients. This story highlights the increased risk of relying on unfamiliar technology (in this case, eDiscovery) and the potential liability. As the attorney testified, they were unaware that the search results only showed the first portion of results, but assumed this parsed morsel was the complete data set. Instead of distributing 1,000 records, 100 times that number were exposed.
And beyond misuse, law firms must recognize that parties exist that wish to abuse these technologies and take advantage of user error, misunderstanding or full on fraud and theft. In one case, a law firm was targeted by a well-funded nation state in retaliation for representing a client who’s home country considered a dissident. In this case, the initial attack exploited vulnerabilities in the firm’s remote administration tools infrastructure.
Earlier this year, eSentire commissioned Spiceworks to survey 600 IT and security decision-makers about their top concerns around their supply chain and the policies or procedures used to mitigate identified vendor risks. Even though the majority of respondents felt confident in the vendor to keep their data safe, nearly half (44 percent) of firms had experienced a significant, business altering data breach caused by a vendor. What’s worse, only 15 percent of affected firms were notified of the breach by their vendor.
These breaches resulted in reports of disrupted operations (27 percent), increased operational complexity and cost (52 percent), reputational damage (19 percent) and financial losses and penalties (26 percent).
The same Spiceworks report indicates that while most firms (60 percent) have written technology adoption and vendor policies. Yet only the largest law firms are able to tackle umbrella security frameworks of NIST , ISO 27001 information and security management, and ISO 27032 guidelines for cybersecurity.
Only one third (35 percent) of respondents’ firms considered vendor risk a top priority of their business, and 32 percent said they lack the necessary resources to properly manage such risks. Two smaller and lesser known guidelines can perhaps reduce resource requirements and form a more palatable approach to risk mitigation. The first, the New York Department of Finance Cyber Rules and Regulations NYCRR 500 section 11, provides actionable steps to access and mitigate vendor risk. And the second, organized by the National Cyber Security Centre in the UK, is comprised of 12 principles for grappling with supply chain risk, including defining risk, establishing mitigation controls, validating assurances, and building in continuous improvement.
These frameworks can be distilled down to five core elements: needs analysis, documented technology selection process, risk assessment, establishing controls and defining binding obligations.
The first stage of technology adoption is to establish minimum requirements governing the law firm-vendor relationship. A common concern among technology leaders is their ability to convey needs and risk to the managing partners, without using jargon or measures that fail to persuade their managing partners. This communication gap often results as a misalignment between business objectives and technology projects and spend. Conducting a needs analysis helps build consensus across the law firm.
An established selection process tests multiple vendors’ ability to meet requirements within specific parameters, offering a consistent and comparable framework for assessment. This eliminates or at least reduces subjective biases such as personal relationships or preferred vendor status for incumbent suppliers.
While outsourcing brings business benefits, the strategy also introduces risks to a company. A risk assessment provides a forum in which security leadership establishes early influence in the decision-making process. It’s an early seat at the table. That’s not to suggest that security should have a veto; rather, it’s to expose the security team to potential risks and help with taking actions to mitigate that risk.
The evaluation and selection process exposes risks which define a set of requirements to eliminate, reduce or otherwise mitigate these risks. Controls should include:
Legal documents and contracts should define all obligations and legal requirements. This vehicle creates an agreement of operation between the two parties and captures acknowledgement of obligations by both parties. Beyond defining binding obligations, the contract outlines legal obligations, defines minimum security requirements, establishes notification expectations and details liabilities and indemnifications.
Mark is a cybersecurity evangelist who has spent significant time researching and speaking to peripheral factors influencing the way that legal firms integrate cybersecurity into their day-to-day operations.