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12/5/2019
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SOC 2s & Third-Party Assessments: How to Prevent Them from Being Used in a Data Breach Lawsuit

Assessments can be used against your company in court proceedings. Here's how to mitigate this potential risk.

SOC 2 audits and third-party technical assessments are useful tools for an organization to use in navigating the security risks it may face. But these security road maps also can provide direction to a plaintiff's counsel suing your organization in a later lawsuit related to a data breach. If the assessment describes your organization as being riddled with security vulnerabilities and, after the assessment, one of these unrepaired vulnerabilities is utilized to infiltrate your network, the assessment becomes proof that your organization knew about the risk and did not fix it.

On the flip side, engaging a third party to assess your security risk can also be used as a defense in court proceedings, showing that your organization engaged unbiased third parties to determine what risks it might face. In that way, an assessment can be a powerful tool in later court proceedings.

How do you mitigate against this potential future risk? Here are two strategies you can employ.

1. Think hard about who you're engaging and the services they provide.
In the last few years, there has been a proliferation of service providers claiming to offer technical security assessments. In determining who to hire, budget can't be your primary driver. Are your own customers requiring you to have a SOC 2 audit? Then you will need to engage a CPA firm that offers auditing services covering the Systems and Organizational Controls 2 (SOC 2) as put forward by the American Institute of Certified Accountants. Outside of a SOC 2, you may engage technical firms to perform assessments based on a variety of approaches, including the matrix from the National Institute of Standards and Technology.

But keep in mind that not all technical firms are created equal and that you need a reputable provider to put forward an assessment. Cheap sometimes means shoddy work. And if a service provider is looking for a later "up-sell" of services, be aware of that, too. Offering an array of services is not bad per se, but be cognizant of what could be motivating some of the findings. For instance, if the provider sells firewalls and suddenly your assessment comes back suggesting you need an upgrade, you may wonder whether the assessment was motivated by an unbiased opinion.

Create a list of questions to conduct diligence on providers and interview multiple providers. Develop a document trail of the process that went into engaging the audit team. This can be beneficial later to show your organization was thoughtful about security risk and wanted a truly unbiased opinion.

2. Arrange the engagement to protect the findings.
Attorneys have two special powers when it comes to confidentiality and protecting information. The first is the attorney-client privilege. Under the attorney-client privilege, communications between a lawyer and a client seeking and providing legal advice are protected from disclosure. The second is a nuanced doctrine called the work-product doctrine. Under this doctrine, a lawyer may engage a consulting expert to support the lawyer's legal work on behalf of a client. This too, in most cases, is considered confidential and privileged.

So, what does all this have to do with getting an assessment? Organizations are now hiring outside counsel to work with them on obtaining an assessment in order to shield assessments with confidentiality. The process works like this: An organization engages outside counsel to assist in reviewing the organization's cybersecurity risk. Outside counsel then engages the third-party assessment team to provide a technical assessment or SOC 2 to the lawyer. The engagement letter is set up so that the lawyer receives the technical assessment to support the lawyer's legal work. The lawyer and the client discuss the findings of the report together.

What does this do? It insulates, as best we can, the findings from being disclosed in a later lawsuit by using both the attorney-client privilege and the work-product doctrine. I've seen assessments come back with score cards of 35/100. The last thing any defendant in a data breach lawsuit needs is a 35/100 assessment scorecard blown up as an exhibit in front of a jury box, with an impassioned plaintiff's lawyer talking about how the company received a F on its assessment and did nothing to repair the risk before the breach occurred.

Without a lawyer, there is no privilege. Marking the document "confidential" and exchanging it may keep it confidential within your organization. But it won't protect the assessment from being disclosed to a plaintiff's lawyer in a later data breach lawsuit. The only way to try to do that is to work hard on the front end of obtaining assessments and have a lawyer involved in the process.

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Beth Burgin Waller is a lawyer who knows how to navigate between the server room and the board room. As chair of the cybersecurity & data privacy practice at Woods Rogers, she advises clients on cybersecurity and on data privacy concerns. In this capacity, she ... View Full Bio
 

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