Why Do Law Firms Keep Being Targeted by Cybercriminals?

November to December has proved to be very testing for law firms here in the UK.

Many have recently come under a microscope in the business world because of the number of high-profile cyber-attacks affecting so many firms.

It was reported in early November that one of the most prestigious legal practices in the country and part of the ‘magic-circle’ had been hit by the criminal ransomware group LockBit.

Additionally, in late November a catastrophic cyber incident hit the legal industry with up to 80 law firms being effectively shut down after their IT supplier had become a victim of a cyber-attack; and the issue is still not fully resolved at the time of publishing (08/12/23).

 

Why are law firms targeted?

Law firms are heavily engaged in many financial transactions and possess an abundance of confidential client data and sensitive information. This abundance of valuable data creates an opportunity for attackers to monetise any successful breach by either selling the data or by blackmailing the company that’s been hacked.

Moreover, the extortionate cost of downtime for a law firm serves as a financial incentive for attackers using ransomware. When critical systems go down, the operational disruption can be so severe that some law firms decide to pay the ransom to prevent further reputational and financial damage – although there is no guarantee that it will work.

For example, if a law firm that is handling multiple house sales has been impacted by a ransomware, and there is a huge possibility that they will be unable to complete any of the deals which will emotionally and financially impact multiple clients, then a decision may be made to just pay the ransom because the alternative is worse. It must be stressed however that the UK government will always advise against paying any form of ransom and there are no guarantees it will work.

It is rumoured that the ‘magic-circle’ law firm that was mentioned in the introduction paid the ransomware to Lockbit. There are rumours because Lockbit posted the company’s name on the dark web with a warning that all the firm’s data would be published if the ransom was not paid by 29^th November. Their name was then removed a few days before the ‘deadline’. The law firm in question has not confirmed whether the ransom was paid, and it may have been removed while negotiations were ongoing.[1]

 

The consequences for law firms if they suffer a cyber-attack:

Here are just some of the things law firms must deal with after an attack:

• Reputational damage – no director/partner wants to see their firm plastered all over the news because clients are naming and shaming them for being unable to complete their job or listed on the ICO’s website because of a data breach.
• Damage or destruction of client relationships.
• Financial losses – unable to complete transactions; ICO fines; potentially getting sued by clients.
• Claims on PI insurance cover – premiums likely to go up.
• System downtime – unable to work or complete transactions.
• Extreme stress at having to deal with an outage and everything listed above.

Real-world examples:

A recent catastrophic cyber incident has hit the legal industry in the last two weeks. Up to 80 law firms in the UK have not been able to operate after their IT supplier had become a victim of a cyber-attack; and the issue is still not fully resolved at the time of publishing (08/12/23).

Although the granular details have not been published, it has been reported that many clients of affected law firms have been left emotionally distressed at the prospect of their house purchase falling through because their solicitors are unable to work.

A prospective house buyer tweeted on X about the incident:

‘Meant to complete yesterday. Your inability to keep your cyber security in place is causing a lot of distress’.[2]

This is a real-world example of the emotional and financial ripple effects that an operational shutdown can have on people.

Despite the law firms themselves not being directly at fault for the cyber-attack on their IT supplier, they will be the ones that face the potential damages listed above as clients who are facing their own turmoil in not completing their house sales are rightly or wrongly, ‘naming and shaming’ them on social media.

And despite not being directly at fault for the incident, they still bear some responsibility because they must be due diligent in choosing their suppliers.

This topic is huge and deserves its own blog post which we will cover.

 

A concerning trend:

This type of attack where a third-party supplier is being compromised to cause disruption to their bigger clients is referred to as a supply-chain attack.

Supply-chain attacks are becoming more frequent and it’s very concerning.

More law firms are falling victim to cyberattacks through a third party because sometimes it’s easier for the criminals than to go direct.

Speaking about the recent supply-chain cyber incident on the legal IT provider, Peter Wright, solicitor and managing director of Digital Law UK and an expert in cyber protection, said ‘it is not surprising that hackers went after an IT provider that specialises in supporting law firms’.[3]

 

Size doesn’t determine the risk: why even small law firms are vulnerable:

It’s a common misconception that small law firms are less vulnerable to cyber threats. In reality, the size of a firm is not the determining factor. Many cyber-attacks begin as random, automated searches for vulnerabilities, only to escalate into more focused and damaging attacks upon finding an entry point.

Vigilance and proactive cybersecurity measures are crucial for all law firms, regardless of their size.

 

How to safeguard your law firm against cyber threats:

First and foremost, cybersecurity is a board-level issue!

Recognising cybersecurity as a critical board-level concern is the first step in safeguarding your law firm against cyber-attacks.

Compliance with UK GDPR and SRA standards recommends a comprehensive approach to cyber risk management.

This involves assessing potential risks, implementing tailored measures to mitigate them, and continually evaluating the effectiveness of these controls. Key actions include scrutinising vulnerabilities in your technology, providing staff training, and establishing robust policies and procedures.

Staff training has now become imperative because hackers don’t tend to break in, they log in because a member of staff has mistakenly given them access.

Directors and senior partners are held responsible for any data breach and must show due diligence when choosing suppliers. If you have embedded cybersecurity into your working culture and decision making, then the risks of being impacted will be greatly reduced.

 

What about cyber insurance?

While PI insurance may offer coverage for losses to clients, some of the law firm’s internal losses may be covered through a standalone cyber policy if firms have one. The downside is that any claims made will likely lead to higher insurance premiums so it will impact future finances.

However, it’s crucial to recognise the limitations of insurance coverage. Fines, regulatory actions, harm to client relationships, and damage to reputation remain uncovered by insurance.

Furthermore, the internal disruption, emotional toll, and sleepless nights following a cyber-attack, are beyond the scope of any insurance policy.

The key takeaway is that compliance with legal and regulatory obligations is paramount. Relying solely on insurance is not a substitute for fulfilling these obligations, as it cannot mitigate the broader impact on client relationships, reputation, and the overall well-being of the firm. Directors and senior partners should not solely be relying on insurance.

 

 

 

[1] Law firm A&O silent on whether it paid ransom to cyber-criminals | Law Gazette

[2] Cyber-attack leaves home sales in limbo – BBC News

[3] News focus: Cyber-attack on law firm IT provider CTS hits conveyancing firms – what lessons need to be learned? | Law Gazette