Protecting Directors from Liability for Cybersecurity Risks

As we have noted in a number of recent posts, corporate cybersecurity risks have become a leading concern for both boards of directors and the SEC.  Our colleagues David Barres and Dom Picca recently published an article on "Director Liability for Cybersecurity Risks" in Corporate Counsel, in which they advise corporate boards on how to protect themselves against lawsuits claiming that the directors breached their fiduciary duties by failing to ensure adequate corporate cybersecurity. They also review the principles governing fiduciary duty suits and related litigation concerning data security. In one recent shareholder derivative suit, for example, the plaintiff claimed that the president/CEO/director of a software company breached his fiduciary duties by taking actions that allegedly compromised client security, exposed the company's website to hacking, and violated data-privacy laws. David and Dom list specific steps that directors can take to:

 

• Improve board oversight of corporate cybersecurity, thereby showing that they have met their fiduciary duties in this area

• Identify potential gaps in director and officer insurance coverage for cybersecurity litigation

• What boards can do to close those gaps

 

 In addition, for more recommendations for directors on cybersecurity and insurance issues, please check out the Cyber Risks Boardroom Series on Mintz Levin's Privacy and Security Matters blog.

 

YOUR SPEAKERS:

David Barres focuses on commercial litigation in federal and state courts, including complex breach-of-contract, fraud, and securities matters. He has extensive experience representing banks in bankruptcy litigations and other commercial matters, including the defense of fraudulent transfer claims and the litigation of disputes concerning the valuation of businesses and assets. He has arbitrated and mediated numerous international and domestic commercial disputes. He also is a member of the firm's Privacy and Security Practice Group, and litigates privacy-related disputes. Before joining Mintz Levin, David was a litigator at another prominent New York law firm and a law clerk to the Honorable Robert E. Cowen of the US Court of Appeals for the Third Circuit. He also served as a special assistant district attorney for New York County, New York. During law school, he was a member of the New York University Law Review.

 

Dominic Picca is the head of and assigning partner for the New York office's Litigation Practice. He is also co-founder of Mintz Levin’s Distressed Debt & Claims Trading Practice. Dominic is a commercial litigator who concentrates his practice in complex contract, partnership, securities, and real estate disputes. He also has extensive experience litigating and advising clients with respect to disputes involving bankruptcy and distressed debt transactions, intellectual property, and biotechnology.  He is a member of the firm’s Privacy & Security Practice Group, and litigates data breaches and data security issues.  Dominic has been retained as a testifying and consultative expert relating to the purchase and sale of trade claims in bankruptcy.