How to Manage Cyber Risk in Legal Using Inherent Risk Frameworks?

In today’s corporate legal landscape, where large departments engage with numerous law firms and legal vendors, managing cybersecurity risks efficiently is paramount.

Corporate legal departments interact with a vast network of entities entrusted with sensitive data on behalf of the organization.

To address the cybersecurity risks posed by these partnerships effectively, organizations must adopt a strategic approach tailored to the unique demands of legal engagements.

In this article I explore the strategic adoption of an inherent risk framework specifically designed for legal contexts and how it empowers organizations to allocate cybersecurity resources effectively.

Given the critical nature of the data handled by law firms and legal vendors, a targeted risk management strategy is essential to safeguard against cyber threats and ensure data protection integrity.

Key Takeaways

  • Implementing a tailored inherent risk framework is crucial for addressing nuanced cybersecurity risks associated with law firms and legal vendors.
  • Categorize data based on sensitivity levels and prioritize security measures such as encryption and access controls.
  • Evaluate and minimize the volume of sensitive records managed by vendors to reduce data exposure.
  • Implement strict network segmentation and access policies to control vendor access to internal systems.
  • Customize security controls based on specific legal practice areas and collaborate closely with legal teams.
  • Monitor and audit active engagements to ensure compliance with cybersecurity requirements and protocols.

Inherent Risk Framework Factors

Revenue loss due to data breach

It’s quite common for businesses to experience significant revenue loss due to a security breach. Research indicates that 29% of businesses that suffer a data breach also incur revenue losses. Among those affected, 38% reported a revenue loss of 20% or more. (Source: The AME Group)

Traditional enterprise risk frameworks commonly emphasize network access and data sharing, which may not adequately capture the nuanced risks associated with legal vendors. A more comprehensive approach involves integrating additional dimensions into the inherent risk assessment:

1. Type of Data Shared

Assess the nature and sensitivity of data exchanged with legal vendors. This includes personally identifiable information (PII), confidential business information, intellectual property, and privileged communications.

Tip: Categorize data types based on sensitivity levels to prioritize security measures accordingly. Implement encryption and access controls for highly sensitive data shared with legal vendors.

2. Quantity of Restricted Data (# of Records)

Evaluate the volume of sensitive records managed or processed by each vendor. The quantity of records directly impacts the potential impact of a data breach or unauthorized access.

Tip: Implement data minimization practices to reduce the volume of sensitive data shared with vendors. Regularly review and purge unnecessary records to mitigate risks.

3. Access to Company Network

Assess the level of network access granted to legal vendors. Determine whether vendors have direct access to internal systems and sensitive data repositories.

Tip: Implement strict network segmentation and least privilege access policies for legal vendor connections. Use secure VPNs and multi-factor authentication to control vendor access.

4. Practice Area and Matter Type

Analyze the legal practice areas and specific matter types handled by vendors. Different practice areas may pose varying cybersecurity risks based on the nature of legal work involved.

Tip: Tailor security controls and risk assessments based on the sensitivity and complexity of legal matters. Collaborate closely with legal teams to understand unique risks associated with different practice areas.

5. Number of Active Matters

Evaluate the volume and complexity of ongoing legal matters managed by each vendor. Active matters indicate the extent of vendor engagement and potential exposure to sensitive information.

Tip: Establish clear communication channels with vendors to stay informed about active matters and associated cybersecurity requirements. Conduct regular audits to assess compliance with security protocols.

6. Total Annual Spend

Factor in the financial investment in legal services provided by each vendor. Higher spending may signify a deeper partnership and greater reliance on vendor services.

Tip: Tip: Allocate cybersecurity resources based on the total annual spend with each vendor to prioritize security assessments and risk mitigation efforts, especially for vendors with significant financial impact on the organization. For insights into leveraging supplier agreements to drive profitability and operational efficiency, explore our article on “Boost Profits With Efficient Supplier Agreement Management”.

By assessing legal vendors based on these additional dimensions, organizations can refine risk prioritization and concentrate cybersecurity efforts where they are most needed, enhancing overall security posture.

Is Your Organization Effectively Mitigating Cyber Risks Posed by Legal Vendors?

Implementing a legal-focused inherent risk framework empowers organizations to systematically identify, assess, and prioritize their legal vendors based on context-specific cybersecurity risks. This strategic approach not only streamlines the assessment process but also significantly enhances the effectiveness of a legal department’s cybersecurity measures.

In today’s rapidly evolving legal sector, where data protection and cybersecurity are critical, leveraging an inherent risk framework tailored for legal engagements is essential. This proactive strategy enables organizations to manage cyber risks efficiently and safeguard sensitive information, ensuring robust protection amidst evolving cybersecurity threats.

To further enhance your understanding of assessing cyber security risk for law firms and legal vendors, explore our detailed guide: “How to Assess Cyber Security Risk For Your Law Firms and Legal Vendors?”

For strategic insights into supplier contract management, delve into our article: “7 Strategic Tips for Navigating Supplier Contract Management.”

Disclaimer: This article is provided for educational and information purposes only. Neither Swiftwater & Co. or the author provide legal advice. External links are responsibility and reflect the thinking of their respective authors – those are provided for informational purposes only.



Imran Jaswal
Imran Jaswal