Commercial Litigation Involving Cybersecurity Breaches: Understanding the Legal Issues Involved

Commercial litigation arising out of cybersecurity breaches is becoming increasingly common. This type of litigation can involve a wide range of legal issues, and identifying the specific issues in a dispute is critical to making informed and strategic decisions. As a result, engaging an experienced Miami commercial litigation attorney is the first step toward protecting your company’s interests in this scenario.

As cybersecurity breaches become increasingly common, commercial litigation involving cybersecurity breaches is becoming increasingly common as well. Unauthorized intrusions can lead to significant losses—including not only direct financial losses, but also loss of data, confidentiality, and goodwill.  

When facing losses from a cybersecurity breach, companies must quickly make informed, strategic decisions about how best to proceed. In many cases, this will involve taking legal action, preparing to defend against legal action, or both. Understanding the legal issues at hand is a key first step, and it is important to take this step as quickly as possible.

What Are the Legal Issues Implicated By a Cybersecurity Breach?

Cybersecurity breaches can involve a wide range of legal issues. Assessing the legal issues implicated by an intrusion starts with understanding the root cause of the intrusion and the data compromised. With this in mind, some key preliminary considerations include:

Loss Mitigation and Data Breach Reporting

Companies that have experienced cybersecurity breaches should act promptly to mitigate any and all losses resulting from the unauthorized intrusion. This includes not only their own losses but also losses related to the exposure of customers’ or other third parties’ data. Additionally, in many cases, cybersecurity intrusions will give rise to data breach reporting obligations—and failure to meet these obligations in a timely manner can lead to additional liability exposure.  

Data Security Vendor Liability

When companies rely on third-party vendors for data security, cybersecurity breaches will often give rise to contractual liability. In this scenario, companies that have experienced breaches should rely on their legal counsel to review their vendor contracts and determine which legal rights and remedies are available to them.

Contractual Liability to Customers or Other Parties

While companies that have experienced cybersecurity breaches may have claims against their vendors, they may also be at risk of facing contract-based claims from customers or other parties. Companies targeted in cybersecurity attacks need to thoroughly assess all potential sources of contractual liability exposure and then formulate their responses (and, potentially, their defense strategies) accordingly.

Liability Exposure Under Data Security Laws

In several states, data security laws provide strong protections for residents who suffer losses due to cybersecurity breaches. Many of these laws include both private-right-of-action provisions and governmental enforcement provisions. As a result, beyond assessing their contractual liability exposure, targeted companies may need to assess their statutory liability exposure as well.

Indemnification, Liability Limitations and Other Contractual Protections

Indemnification rights, liability limitations, and other contractual provisions can play a major role in determining companies’ liability exposure and the legal options available to them. For example, while companies that have experienced cybersecurity breaches will often have indemnification claims against their data security vendors, these claims are often subject to damage caps and other limitations. When assessing the potential legal ramifications of a breach, it is critical to take these provisions into account—and to note any gaps or areas of interpretation.

Again, these are just examples of some key early considerations when facing the consequences of a cybersecurity breach. Making informed decisions requires a comprehensive assessment of all pertinent legal issues, and it is important to conduct this assessment as soon as possible after the breach.

When Do Cybersecurity Breaches Lead to Commercial Litigation?

Cybersecurity breaches can lead to commercial litigation in a wide range of scenarios. Broadly speaking, however, these incidents are most likely to lead to litigation when they result in substantial losses. With this in mind, assessing the scope of an intrusion is a key early step as well; and, the broader the scope, the more likely it is that pursuing litigation will be worthwhile for one or more of the parties involved.

FAQs: Responding to a Cybersecurity Incident

What should I do if my company has experienced a cybersecurity breach?

If your company has experienced a cybersecurity breach, you should promptly engage experienced legal counsel. Responding to a cybersecurity breach requires a knowledgeable, risk-focused approach, and you need to ensure you make informed decisions based on a comprehensive understanding of the circumstances at hand and applicable law.

Should I be worried about litigation if my company has experienced a cybersecurity breach?

If your company has experienced a cybersecurity breach that exposed customers’ or other third parties’ data, facing litigation is a very real concern. As you formulate your company’s response, you will need to do so with this risk in mind.

When can cybersecurity vendors be held liable for their customers’ breaches?

Whether companies can hold their cybersecurity vendors accountable in the event of a breach depends on the terms they have agreed to. While customers will have grounds to sue their cybersecurity vendors in many cases, the terms of the parties’ agreement will ultimately determine which legal options are available under the circumstances.

How Our Law Firm Can Help

From investigating unauthorized intrusions to providing representation in breach-related litigation, our law firm assists clients with all aspects of responding to cybersecurity breaches in South Florida. If your company has experienced a breach, or if one of your company’s clients or vendors has experienced a breach, we can guide you forward and take appropriate legal action on your company’s behalf as warranted.

Speak with a Miami Commercial Litigation Attorney in Confidence

To speak with a Miami commercial litigation attorney at Gonzalez Law Offices, P.A. in confidence, contact us today. Call us at 305-676-6677 or tell us how we can get in touch online to schedule an appointment as soon as possible.