Cybersecurity Breaches and Commercial Litigation: Legal Responses

Cybercrime rates are on the rise throughout the U.S. As many as 80% of U.S. businesses say they have been hacked at some point. Simultaneously, the cost of mitigating a data breach keeps climbing. Worldwide, the average price of cleaning up after a breach has reached $4.45 million. In the United States, it’s more than double that. 

Some of these costs relate to ransomware payments and fixing the network. However, many businesses are being pushed into financial instability by regulatory penalties and expensive class-action litigation. 

These lawsuits against commercial entities are becoming more common. One major reason for the increase in litigation is that potential plaintiffs have become easier to identify due to new public disclosure rules from the SEC. 

Mitigating Legal Challenges Starts Well Before a Data Breach Lawsuit

For this reason, it’s important for businesses to get their ducks in a row before a data breach ever occurs. This involves obtaining cyber insurance that covers class-action lawsuits and having adequate cybersecurity measures in place to protect customer data.

If a breach does occur, companies must react swiftly to contain the damage. That means determining the scope, complying with reporting rules, and developing a comprehensive response plan. If you don’t take appropriate proactive and reactive measures, you may face serious litigation challenges.

Understanding Possible Defenses and Legal Responses to Cybersecurity Litigation

Speaking with an attorney immediately upon discovering a data breach will always be your best move. Not only can an experienced lawyer help you navigate the cleanup process, but they’ll also be there to advise you in the case of any class action lawsuits or legal action from regulatory agencies.

When it comes to lawsuit responses, a one-size-fits-all approach just isn’t possible. However, there are some common responses that businesses have used to successfully dismiss cases, transfer liability, or avoid financially devastating settlements.

Lack of Standing

In some cases, a business law attorney has been able to argue that there seems to be a lack of standing for the case because plaintiffs have not suffered an injury in fact. In other words, their damages are not “concrete, particularized, actual, or imminent.” 

If the plaintiff cannot prove that their identity was stolen or that they had any out-of-pocket loss as a result of the breach, the courts may decide to dismiss it. There may also be a lack of standing if plaintiffs can’t show a direct and logical connection between the data breach and their damages.

Proactive Measures

Another common defense revolves around the fact that a company has tried its best to protect customer data. For this reason, it’s critical to do all you can before a data breach occurs to put reasonable and compliant cybersecurity measures in place. If you are proactive about security, you may be able to use that fact to your advantage in court. 

Third-Party Liability

Some take the option of shifting liability for damages to a third party. Of course, it can be difficult to hold hackers liable if you don’t know who they are or can’t prove their involvement in the breach. 

However, you may be able to go after a security or cloud hosting company if they are responsible for storing your data. An attorney can scan the contract for liability provisions to see whether you can hold the company accountable.

Navigating the Ever-Changing World of Cybersecurity Law

It’s important to realize that cybersecurity law remains in its developmental stages. Guidance isn’t always clear-cut, even from regulatory agencies. This makes having an experienced attorney on your side during a data breach essential.A skilled business law attorney at Kohan Law Group in Nassau County, Long Island, can help you sort out the facts of your case and navigate recent legal developments to understand your next steps. Contact us today to learn more about how we can help you with your data breach situation.