It’s Business, And It’s Personal

Business litigation is spawned by devastating data breaches

On Behalf of | Oct 9, 2014 | Business Contracts & Disputes |

The technology revolution provides solutions and innovations that are extremely helpful to small business success, both nationally and here in North Carolina. However, the same technological advances have created problems and weaknesses that can make an ill-prepared company prone to substantial liability to third parties. Business litigation is now spawned by security and data breaches that were essentially nonexistent until recent years.

With retailers storing voluminous data on thousands or even millions of customers, they take on a new obligation. They must safeguard that information and protect the customer and third-parties from exposure, theft and breach of privacy interests. We’ve seen the near downfall of some giant retail companies that got caught ‘loafing’ on the front line of defense, and then reacted poorly in their handling of damages and in the restoration of normalcy.

As in the case of retail conglomerate Target, for example, a flood of business litigation and class-action consumer lawsuits were initiated. That body of litigation continues and may go on for years. However, the danger is not limited to the giant corporations. Any company that is responsible for a data base of past and current customers can be hacked and severely damaged.

The company even risks catastrophic reputational damage if it fails to respond swiftly, candidly and effectively in fixing the breach and protecting its customers to the extent possible. A company should do certain other things to manage a breach. It should be protected by specific insurance, over and above general liability. That kind of insurance is more and more available in recent years and months.

In North Carolina and elsewhere, businesses small and large must adopt plans for effective responses should an attack occur. In addition to the above, other preparatory steps can be taken to try and prevent such incidents and the necessity of business litigation. When strong encryption methods are adopted, and other preventive plans are put in place, the company will have taken a long step forward. It will have attained that ‘peace of mind’ that comes from knowing that all of the right measures were selected and implemented.

Source:, “In wake of recent data breaches: Decoding the myths about security, data breaches for N.J. companies“, Meredith Schnur, Oct. 7, 2014