August 22, 2017

Two Law Firm Hacks Should Be Scaring Your Firm Into Action

Editor’s Note: This post originally appeared on Stuart Teicher’s blog, “Keeping Lawyers Out of Trouble,” on April 4, 2016. Reprinted with permission.

Headshot-Stuart-TeicherBy Stuart Teicher

For years people have been warning that law firms of all sizes are major targets for cyber-criminals. If your firm didn’t take that seriously before, then there are two major hackings last week that should get your attention.

The Wall Street Journal reported that cyber criminals breached Cravath, Weil Gotshal, and several other unnamed firms (read the article here: http://on.wsj.com/1MzYlN2). The paper states that it’s not clear what (or whether) information was taken, but the focus is on the possibility of confidential information being stolen for purposes of insider trading.

The other major breach is so big that it has its own hashtag— search Twitter for #PanamaPapers or #PanamaLeaks.  According to Reuters, the target was a law firm in Panama who specializes in setting up offshore companies. Hackers stole data from the firm and provided that data to journalists who promptly revealed it to the public (read the article here: http://reut.rs/25GEy4X). The information allegedly reveals a network of offshore loans. According to the BBC, the stolen data reveals how the law firm, “has helped clients launder money, dodge sanctions and avoid tax” (read the BBC’s article here: http://www.bbc.com/news/world-35918844). Political figures and friends of popular politicians are allegedly implicated, according to the report.

My concern is not about the obvious political ramifications. My concern is about the ethical ramifications to lawyers. The danger of hacking is real.

No report has implicated any type of ethical wrongdoing on the part of any firm. That needs to be restated and made abundantly clear: there has been no report of any evidence of ethical impropriety by any of the law firms mentioned in the news. I am bringing this to your collective attention because it should serve as a warning. Confidential client information was stolen from that law firm in Panama… which reminds us that we are targets.

All lawyers are targets. Small firms, large firms, in-house counsel, government lawyers, you name it. The bad guys know that lawyers are the custodians of valuable information and they are coming after us in a big way. The message for all of us is clear: you could be subject to an ethics grievance if you don’t take proper steps to secure your clients’ information.

The responsibility to protect our client information is nothing new. However, these recent events require us apply an increased sense of urgency to evaluating our compliance with that duty. Have you, or your firm, taken the necessary steps to adequately protect your clients’ information? Have you considered the fact that bad guys could be targeting you? What steps have you taken to counteract the potential piracy that could be aimed at your clients’ information?

You could be darn sure that someone is going to be asking those questions to the firms that were targeted in the hacks. Maybe you need to put yourself in their position and ask, “how would we fare if that review was directed toward us?”

Our duty of competence requires that we take appropriate steps to protect our clients’ confidential information. And remember that you, as the lawyer, have the primary ethical duty, not your IT people. Furthermore, various ethics opinions have held that, in some circumstances, the lawyer needs to understand the underlying technology itself.

If these issues weren’t on the front burner in your office before, these two hacks should be causing you to shift your priorities.

Quickly.

 

Save the Date!

Stuart Teicher will be at the CLE offices on Thursday, September 8, 2016, to present two ethics programs. Registration is not yet open, but mark your calendars and don’t miss these important programs.

 

Stuart I. Teicher, Esq. is a professional legal educator who focuses on ethics law and writing instruction. A practicing attorney for over two decades, Stuart’s career is now dedicated to helping fellow attorneys survive the practice of law and thrive in the profession. Stuart teaches seminars and provides in-house training to law firms/legal departments.

Stuart helps attorneys get better at what they do (and enjoy the process) through his entertaining and educational CLE Performances. His expertise is in “Technethics,” a term Stuart coined that refers to the ethical issues in social networking and other technology. He also speaks about “Practical Ethics”– those lessons hidden in the ethics rules that enhance a lawyer’s practice. Stuart writes the blog “Keeping Lawyers Out of Trouble.”

Mr. Teicher is a Supreme Court appointee to the New Jersey District Ethics Committee where he investigates and prosecutes grievances filed against attorneys, an adjunct Professor of Law at Rutgers Law School in Camden, New Jersey where he teaches Professional Responsibility and an adjunct Professor at Rutgers University in New Brunswick where he teaches undergraduate writing courses. He is a member of the bar in New York, New Jersey and Pennsylvania. In 2014, he authored the book Navigating the Legal Ethics of Social Media and Technology (Thomson Reuters).

HB 13-1034: Redefining “Credit Sale Contracts” As Pertinent to Farm Products and Commodities

On Wednesday, January 9, Rep. Jerry Sonnenberg and Sen. Angela Giron introduced HB 13-1034 – Concerning the Wholesale Marketing of Farm Products, and, in Connection Therewith, Authorizing Electronic Warehouse Receipts, Modifying Procedures for Letters of Credit and Surety Bonds, and Modifying Requirements for Credit Sale Contracts.  This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

The bill amends the definition of “credit sale contract” by changing the date on which the sale price is to be paid from at least 60 days after delivery of farm products or commodities to at least 30 days after delivery. The bill requires dealers and commodity handlers to provide a credit sale contract within 30 days after a purchase, rather than 60 days after the receipt of farm products or commodities. These sections also repeal a requirement that credit sale contracts specifically state that they are an extension of credit and substitute a requirement that the contract include one or more statements specified by the commissioner of agriculture by rule, including one that warns a producer that entering into a credit sale contract entails a risk that the bond may not completely protect the producer from loss in the event of a failure of the dealer or commodity handler.

The bill will:

  • Repeal the law specifying that credit sale contracts do not require a bond; and
  • Authorize producers or dealers protected by a letter of credit or surety bond to ask the department of agriculture to recover damages covered by the letter or bond. An action to recover damages must be filed within 180 days, rather than 24 months, after the date of the transaction or loss.

The bill repeals a requirement that state agencies determine whether a financial institution upon which an irrevocable letter of credit is drawn will be able to make payment on the letter before accepting an irrevocable letter of credit.

Current law requires commodity warehouses to issue paper receipts. The bill authorizes commodity warehouses to issue electronic receipts. On Feb. 1, the House approved the bill on 2nd Reading.

Since this summary, the bill passed a Third Reading in the House.

HB 13-1004: Establishment of Career Pathways Program to Provide Grants to Eligible Entities Such As Approved Workforce Training Programs

On Wednesday, January 9, 2013, Rep. Crisanta Duran and Sen. Andy Kerr introduced HB 13-1004 – Concerning the Colorado Careers Act of 2013. This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

The bill establishes the career pathways program (program) in the division of employment and training (division) in the department of labor and employment. The program provides grants to eligible entities to enable individuals to acquire skills necessary to obtain or improve their employability. The bill establishes a career pathways fund and directs the division to submit an annual report to specified committees of the general assembly. The program is repealed on Jan. 31, 2016, unless the director of the division sends notice to the revisor of statues that the program has proven effective through significant job placement.

Current law authorizes enhanced unemployment insurance benefits to a claimant who is engaged in an approved training program. The bill expands the definition of “approved training program” to include an approved workforce training program provided by a nonprofit entity.

Current law requires the department of higher education (department) to produce a report on workforce needs and credential production. The bill includes local workforce investment boards in the description of entities with whom the department should consult to prepare the report.

The bill also requires the department to produce a report on the employment status of persons who have graduated from Colorado public institutions of higher education within each of the previous five years.

The bill requires the office of economic development to prepare a report on workforce needs to attract, develop, and retain businesses in Colorado and to forward the report to specified departments and committees of the general assembly. Assigned to the Business, Labor, Economic, & Workforce Development Committee.

HB 13-1003: Creation of Economic Gardening Pilot Project to Provide Strategic Assistance to Some Colorado Companies

On Wednesday, January 9, 2013, Rep. Pete Lee introduced HB 13-1003 – Concerning the Creation of an Economic Gardening Pilot Project in the Colorado Office of Economic Development. This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

The bill creates an economic gardening pilot project in the Colorado office of economic development (office). Through the pilot project, staff members of the office and small business development centers (SBDCs) who have been trained and certified in economic gardening principles and practices provide 12 months of strategic assistance to at least 20 Colorado-headquartered second-stage companies and SBDC clients selected by the state director of SBDCs in the office.

The state director reports annually on the results of the pilot project to the general assembly, and the pilot project terminates in 2016. Assigned to the Business, Labor, Economic, & Workforce Development Committee.

HB 13-1001: Creation of the Advanced Industries Acceleration Grant Program in the Office of Economic Development

On Wednesday, January 9, 2013, Reps. Dave Young and Sen. Rollie Heath introduced HB 13-1001 – Concerning an Advanced Industry Grant Program, and, In Connection Therewith, Enacting the “Advanced Industries Acceleration Act”; Adding Representatives from Advanced Industries to the Economic Development Commission; Repealing the Bioscience Discovery Evaluation Grant Program and the Clean Technology Evaluation Grant Program; and Creating the Colorado Advanced Industries Acceleration Cash Fund To Be Used to Provide Proof-of-Concept Grants, Early-Stage Capital and Retention Grants, and Infrastructure Funding Grants. This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

The bill creates the advanced industries acceleration grant program (program) in the Colorado office of economic development (office). The following industries are defined to be advanced industries: advanced manufacturing, aerospace, bioscience, electronics, energy and natural resources, infrastructure engineering, and information technology.

The program includes the following types of grants:

  • A proof-of-concept grant for an advanced industry research project to an eligible office of technology transfer;
  • An early-stage capital and retention grant to an eligible company for the purpose of accelerating the commercialization of advanced industry products or services to be manufactured or performed in the state; and
  • An infrastructure grant for an advanced industry project that builds or utilizes infrastructure to support or enhance the commercialization of advanced industry products or services or that contributes to the development of an advanced industry workforce.

Each type of grant has its own eligibility requirements, preferences, and maximum grant amounts. If an applicant qualifies for a preference, the maximum grant amounts do not apply. All grant applicants are required to identify the anticipated number of jobs created or retained in the state, capital invested or attracted in the state, and any other economic impacts that may result from the grant. The program absorbs the bioscience discovery evaluation grant program and the clean technology discovery evaluation grant program, which are both repealed in the bill. Assigned to the Business, Labor, Economic, & Workforce Development Committee.