Hackers Seek Corporate Secrets, Breach Big Law Firms

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By Ellen Rosen

March 16 — Data breaches don't just affect retailers and banks; most big law firms have also been hacked, according to a report from Cisco Systems Inc.

Although cybercrime has plagued U.S.-based law firms quietly for close to a decade, the frequency of attempts and attacks has been increasing substantially. Specific numbers aren't available, but security analysts say cybercrime directed at law firms has increased.

This is particularly true at firms with practices involving government contracts or mergers and acquisitions, and especially when non-U.S. companies or countries are involved.

“Law firms are very attractive targets. They have information from clients on deal negotiations which adversaries have a keen interest in,” Harvey Rishikof, co-chairman of the American Bar Association Cybersecurity Legal Task Force, told Bloomberg News. “They're a treasure trove that is extremely attractive to criminals, foreign governments, adversaries and intelligence entities.”

Breach at Top 100 Firms

Although Cisco ranked law firms as the seventh most-vulnerable industry to “malware encounters” in its 2015 Annual Security Report, other statistics relevant to law firms are more striking.

At least 80 percent of the biggest 100 law firms have had some sort of breach, Peter Tyrrell, chief operating officer of Digital Guardian, a data security software company, told Bloomberg News.

Stewart A. Baker, a partner at Steptoe & Johnson LLP in Washington, said the number may be higher. He recounted to Bloomberg News what an FBI agent told him: virtually all of the biggest firms have faced some sort of data breach.

Intrusions by Foreign Nations

According to Richard Betjlich, chief security strategist of data-security company FireEye Inc., the threat to law firms grew as hackers became more adept. The biggest increased threat comes from hackers hired by foreign nations, especially China, he told Bloomberg News.

“If you're doing business in China or representing clients in China, you will get hacked,” Betjlich said. “And they're not just stealing intellectual property for reproduction. They're interested in mergers and acquisitions as well. It's the way they conduct due diligence,” he said.

After all, Betjlich said, “what better way to negotiate than to have access to redlined documents from the other side?”

Five Chinese military officials were accused in an indictment filed in May 2014 of hacking into computers at six companies, including Alcoa Inc., U.S. Steel Corp. and Westinghouse Electric Corp., to access confidential information.

No law firms were listed as victims of those attacks, although the indictment alluded to the interception of privileged attorney-client communications. However, Wiley Rein LLP, which represented SolarWorld, one of the companies named as a target, was hacked about the time SolarWorld's computers were compromised, Bloomberg News reported in 2012. Wiley Rein spokeswoman Patricia O'Connell declined to comment on the alleged breach.

Some law firms' systems haven't been breached. Emily M. Yinger, managing partner of the Washington-area offices of Hogan Lovells LLP, said her firm has been spared, although she noted, “we constantly intercept attacks.”

E-Mail Attacks

The problems range from the hapless lawyer who clicks on a fake e-mail purporting to be from the U.S. Postal Service to much more intricate, pervasive breaches.

Baker, for example, said he personally faced one a few years ago when a hacker impersonated him, setting up a Yahoo! account under his name and e-mailing lawyers at Steptoe with a link to a report that was similar to documents he had sent.

But his firm was lucky—only one person clicked, and “the link didn't take,” he said.

As attacks have increased in recent years, the FBI reached out to law firms, Baker and other lawyers said. Law firms have been receptive to the FBI as firm leaders and chief information officers attempt to understand the severity and complexity of the problem.

“Increasingly, everyone is concerned,” Rishikof said. Hacking has “gone from the war room to the boardroom,” he said.

With assistance from Michael Riley, Patrick G. Lee, Sabrina Willmer and Devin Banerjee

To contact the reporter on this story: Ellen Rosen in New York at erosen14@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

 ©2015 Bloomberg LP. All rights reserved. Used with permission.


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