Risk Alerts

The newest report by Ames and Gough (here), outlines the current risk environment for lawyers. To summarize their findings briefly, while claim frequency remains fairly constant their severity is surging, driven by steadily rising defense costs which has been a constant theme year after year.

From cyber litigation to crowdfunding regulations and securities challenges posed by initial coin offerings, technology has been creating legal and regulatory challenges at a rapid pace. The newest challenge - regulation of fintech companies, has state regulators at opposition with the OCC. For the last few months, the OCC has been attempting to proceed with a proposed national charter for fintech companies which would effectively recognize (and regulate) qualifying companies as “specialty” national banks.

Law firms and in house counsel are no strangers to the challenges posed by cyber threats. However a new risk is quickly emerging catching some companies and lawyers by surprise. We’re referring to errors during e-discovery and electronic document management – or more specifically, errors that result in unintended data exposure. Some may not consider such errors true cyber security events in and of themselves due to the internal nature of data exposure and lack of any actual intrusion.

ICO’s (initial coin offerings) have become a popular method of raising funds, particularly for tech companies: the successes of Tezos and Bancor are two prime examples. These transactions offer investors securities in the form of digital currency utilizing certificates or blockchain technology. While much of the allure around ICO’s has been their lack of regulation, that allure may soon be lost. The SEC just released a report following their investigation of DAO Tokens (a quasi crowdfunding platform).

The professional services exclusion has been a clause of concern for many directors. However the specifics of its application has been somewhat confusing. A recent case sheds some additional clarity on how such exclusions may be interpreted by the courts. The eleventh circuit court recently ruled on the “professional services exclusion” to dismiss a bad faith claim against National Union Fire Insurance.

It’s a simple fact, whether company-issued or personally owned, mobile phones have become embedded in the workplace. From answering emails, to remote logins, to signing documents and texting clients – these are corporate activities and property of the employer which can become potent evidence during an investigation.

In an effort to improve the IPO process and attract more filings, the SEC has recently announced that it will extend a benefit (previously only enjoyed by emerging growth companies) to all new IPO seeking companies. Effective July 10, 2017, such companies will be able to file registration statements for "non-public" review. This also extends for a limited time after the IPO.

A look at the FBI’s Internet Complaint Center indicates Business Email Compromise (also known as CEO Fraud and Social Engineering Fraud) topped the list of fraud complaints by a huge margin.

With publications and cyber security professionals still discussing the fallout, it feels like the media grabbing Wannacry attack just happened yesterday. Included in that fallout dialogue was considerable future forecasting of worries and predictions on how such breaches might adapt and escalate. Among the many predictions were: industry coordinated attacks (as surveyed by AIG), smarter ransomware and increasing demands - a long held belief of cyber security experts.

In response to recent changes in technology, the FTC has just released an updated compliance plan along with a new guide to assist companies with their COPPA compliance programs. One notable change: enforcing IOT connectivity. Despite the fact that the maximum penalties have recently increased from 16,000 to 40,000, as COPPANow has calculated, the average fine actually remains fairly low (around $2 in fact).