Course: Law 550: "Legal Issues of Cybersecurity and Data Breach Response"
Semester: Fall 2019
Time: 2:00 PM - 3:50 PM
Place: Room 4046, Duke University School of Law School
This two-credit course will provide an advanced look into the dynamic and rapidly evolving legal field of cybersecurity and data breach response. The course will focus on the workflow during the aftermath of any sort of data security incident, a rapidly growing legal practice area, where legal professionals have emerged as critical leaders and decision-makers.
Every class will begin with a 15-20 minute discussion of current events. The course will be broken up into two parts.
The first part of the course will cover the foundation of the legal aspects of data breach response, in the form of traditional lectures and discussion. The second part of the course will involve a fictional fact pattern/simulation of a data security incident at a financial firm, which also entangles the theft of credit card data. Each class session will address a specific “legal workstream,” with student teams conducting various tasks and with “real-life” outside data breach response experts playing the roles of each relevant fiduciary and constituency. The tasks will include: intake; board briefing; law enforcement liaison; federal/state regulatory interphase; insurance company updates; and vendor/third party/employee briefings.
Course materials are all available online and free of charge. Students will be graded as follows: 40% of grade (Paper); 40% of grade (Simulation Exercise): and 20% of grade (Participation).
We will discuss a range of the most important and timely cybersecurity/ data breach response legal topics, including discussions of:
The second part of the course will present a fact pattern involving a data security incident at a financial firm, which also involves the theft of credit card data. Each class will address a specific “legal workstream,” with student teams conducting various tasks and with actual outside data breach response experts (in person or more likely, via Skype) playing the roles of each relevant fiduciary and constituency.
The tasks will be as follows:
Though the emphasis of this course is on the practical (i.e. the realities of a data breach response law practice), the course will also venture into some of the more theoretical conflicts that arise amid the juxtaposition of law, cyber and business. Constantly evolving, the legal issues of cybersecurity and data breach response create multiple and vibrant opportunities for discussion and analysis. Along these lines, each class may begin with a 20-minute discussion of “current events” pertaining to the legal issues of cybersecurity and data breach response. Though the instructor will provide topics for current events discussion, students will be encouraged to present recent current events for discussion as well.
Course Requirements, Workload Expectation and Grading
Prerequisites. This will be a two-credit course with no prerequisites.
Reading Assignments. In advance of each lecture class, there will likely be a reading assignment, the materials for which will be made available before the semester begins on Sakai (or on www.johnreedstark.com). On occasion, via Sakai, www.johnreedstark.com and/or email, students may receive additional materials relevant to the current events discussion.
Workload Expectation. As required by the ABA, for every hour students are in class, the ABA requires that each student must do about two hours of work outside of class, averaged across the semester; this can be in reading for class, preparing for the course exercises and working on papers.
I. Incident Response, Law Enforcement and the New Accountability Paradigm
Data breach response workflow and coordination requires careful navigation because, among other things, the legal, public communications, and compliance ramifications of any failure can be devastating and value destructive for both public and private companies. This discussion will explore that, just like any other independent and thorough investigation, the work relating to a cyber-attack will involve a team of lawyers with different skill-sets and expertise (e.g., regulatory, ediscovery, data breach response, privacy, litigation, law enforcement liaison, and public communications). The discussion will focus especially on the critical coordination role that is played by the legal function as well as regulatory response aspects of data breach response and the national security implications that lurk in the background of just about every corporate decision.
Yahoo’s Warning to GCs: Your Job Description Just Expanded (Big-Time), by David Fontaine and John Reed Stark (March 2017)
II. Managing Retail Data Breaches.
This discussion will have two parts: First, we will focus on the unique aspects of handling a data breach involving any organization that collects credit card information. When a cyber-attack targets electronically transmitted, collected or stored payment card information, so-called Payment Card Industry Data Security Standards(PCI-DSS) compliance sparks unique investigative and remedial workflow which creates a catalogue of challenging legal issues.
An Oft Overlooked PCI Incident Response Approach, by John Reed Stark (March 2015)
III. Financial Regulators, Law Enforcement and Data Breaches
This discussion will focus on the unique regulatory and legal framework surrounding cyber-attacks of financial firms, with a particular focus on managing issues pertaining to the U.S. Securities and Exchange Commission, the Financial Industry Regulatory Authority and other federal and state financial law enforcement/regulatory agencies.
Think the SEC EDGAR Data Breach Involved Insider Trading? Think Again. By John Reed Stark (D&O Diary, Law 360) (October 2017)
IV. Data Breaches, Cybersecurity and Boards of Directors
This discussion focuses on the requisite strategic framework for boards of directors to effectively analyze and supervise corporate cybersecurity risks. In the aftermath of a corporate cyber-attack, boards and the companies they govern are subjected to immediate public scrutiny and criticism. This new cyber-reality has essentially removed the distinction between board member and IT executive, with cybersecurity emerging as a key corporate risk area.
Cybersecurity: The SEC’s Wake-up Call to Corporate Directors, by John Reed Stark and David Fontaine (March 2018)
Cyber Awareness to Cyber Expertise: The Evolution of Board Cyber Risk Management, by Phyllis Sumner and Nick Oldham (January, 2016)
V. After the Breach: Digital Forensics and Remediation
This discussion covers the latest methods and practices of cyber-attackers, which is critical for legal and practitioners to understand. For instance, during the aftermath of a data breach, an expert forensic team will typically present its findings to the legal team leading the incident response. The legal team will then determine the nature and substance of any contractual, statutory (federal and state) or other requirements triggered by the attack. Without understanding the nature of the latest attacks and threats, a legal team can stumble (badly) concerning this critical responsibility and cannot effectively carry out one of the most critical aspects of data breach response -- remediation.
Here’s what went wrong for Equifax in those first 48 hours, by John Carlin and David Newman (September, 2017)
Ensuring Best Practices in the Investigation of an Incident, by David Fagan, Ashden Fein and David Bender (March, 2016)
The Equifax and SEC Data Breaches: Takeaways, Reminders & Caveats, by John Reed Stark (September 2017)
VI. Cybersecurity Due Diligence
Cyber-security due diligence is rapidly becoming a critical factor of the decision-making calculus for a corporation contemplating a merger, acquisition, asset purchase, or other business combination; an organization taking on a new vendor, partner, or other alliance; or a private equity firm purchasing a new portfolio company. This discussion will focus on the kinds of legal issues encountered during a lawyer’s conducting of cybersecurity due diligence.
Cybersecurity Due Diligence: A New Imperative, by John Reed Stark (June 2017)
VII. Cyber Insurance
Companies have begun taking into account cybersecurity concerns when considering overall enterprise risk management and insurance risk transfer mechanisms, just as they do with other hazards of doing business. Yet there is no standard cyber-insurance policy, and many corporate cyber-insurance policies are bespoke. This discussion focuses on battleground legal issues concerning cyber-insurance, including a discussions of cybersecurity-related class actions.
Who gets Coverage? by Scott Godes (BTLaw Cybersecurity Blog, 2017)