As a law firm, you have a duty to your clients to protect their personal information, especially when it’s stored digitally. Keeping this information safe and secure helps you maintain trust with your clients, and it also helps you remain compliant with industry laws and regulations.
As part of the Gramm-Leach-Bliley Act (GLBA), law firms need to adhere to the Federal Trade Commission’s safeguards rule when storing consumer information digitally. But what does this mean in practice?
Let’s take a look at why the FTC safeguards rule applies to law firms and what you can do to remain compliant.
Key Takeaways
- The FTC safeguards rule requires companies that conduct financial activities to put appropriate safeguards in place to protect their customer’s financial information and sensitive data.
- The FTC safeguards rule requires law firms to put administrative, technical, and physical safeguards in place to protect their data.
- Failing to comply with this rule can result in extensive fines and even legal consequences, as well as the possibility of devastating data breaches.
- Working with a managed IT services provider can help you create a successful strategy for compliance.
Why Does the FTC Safeguards Rule Apply to Law Firms?
The Gramm Leach Bliley Safeguards rule originally required financial institutions to put together a comprehensive information security program to protect their customers’ sensitive data.
This law was typically associated with banks and financial services providers like mortgage brokers and tax preparers. However, in 2023, the FTC expanded the definition of a financial institution to include 13 other industries, including law firms.
If your law firm engages in any activity that is “financial in nature,” such as providing credit or holding personally identifying information (such as social security numbers) you could be subject to this security law.
This is of particular concern for lawyers that deal with financial organizations or real estate transactions.
Taking data security seriously is a must for maintaining client trust and reputation, as well as avoiding costly data breaches and the resulting legal consequences.
What Does the FTC Safeguards Rule Require of Law Firms?
The FTC Safeguards Rule is a complex regulation with multiple parts. The regulation can be broken down into three key categories: administrative, technical, and physical regulations.
Qualifying law firms must follow these rule requirements to avoid costly fines or even lawsuits from the FTC.
Administrative Safeguards
Administrative safeguards focus on your team and your internal processes. Your employees play a very important role in protecting customer data, so it’s crucial that they have access to the necessary tools to do so.
Employee Training
This often starts with employee training. All employees should receive regular training on how to protect customer data and respond to security incidents, regardless of their skill level or role in the firm.
They should learn how to spot the signs of a potential cyber attack, as well as how to limit accidental data breaches and unauthorized access to your systems. As new cyber threats emerge, employees should receive updated training.
Secure Internal Access to Client Information
Companies should also have internal processes in place for safeguarding client information. This starts with secure access controls, which ensure that only the relevant parties have access to your systems.
All of your internal users should have complex passwords that are difficult to guess and use multi-factor authentication for extra security.
Incident Response Plan
Every organization needs a written incident response plan, often called a WISP, that outlines how the team should handle a data breach. This plan is essential for acting quickly and effectively in a crisis.
Additionally, the recent FTC Safeguards Rule requires that this plan must also name a qualified individual or a third-party service, like an IT managed service provider, to take charge of the organization’s WISP. This helps ensure that there's someone specifically responsible for managing any data breach situations.
By having a response strategy in place, you can minimize the damage if a security event does happen, both to your customers and to your firm overall.
If your organization does experience a data breach affecting 500 or more customers, you must notify the FTC within 30 days, or ideally, as soon as possible.
Technical Safeguards
All companies subject to the FTC safeguard rules should have a technical cybersecurity strategy in place to protect your systems from cybercriminals.
If your customers’ personal data is exposed to these bad actors, it could put them at risk of identity theft, which is why these safeguards are so important.
Install Firewalls and Antivirus Programs
At minimum, this includes implementing tools like firewalls and anti-virus programs on all your networks and devices. Ongoing network monitoring is also a must, as this can help you catch potential cyber threats before they cause damage.
Ensure Hardware and Software is FTC Compliant
Your team should also make sure that every software and hardware program you use meets FTC standards. These programs should be updated and patched regularly to eliminate vulnerabilities.
Practice Work-From-Home Safety
If your team works remotely, the devices they use at home should also adhere to strict security standards. Employees should avoid using public Wi-Fi networks when working with sensitive client information, as this could potentially expose your data.
Conduct Regular Risk Assessments
Finally, your firm should conduct regular risk assessments to ensure that no stone is left unturned when it comes to cybersecurity.
Risk assessments will help you identify where your security weaknesses are, so you can put new strategies in place to address them.
Physical Safeguards
Finally, law firms under the FTC’s jurisdiction should have physical safeguards in place to protect their systems. These safeguards should prevent bad actors from breaching your in-office systems and accessing customer data.
Physical safeguards should include access controls for your office. Servers containing sensitive information should be stored in secure rooms, and only specific staff members who need access to complete their work should be able to enter.
Access control systems could require keycodes or even biometric markers for identity verification. Your security measures might also include hiring security staff to verify your team members as they come in and out of the office.
If servers or other pieces of hardware are removed from your system, they should be wiped completely to ensure that any future users cannot access any secure data.
How Can Tech Advisors Help Your Law Firm Comply?
For law firms and other non-banking financial institutions, complying with the FTC safeguard rule might feel daunting. This is especially true for small businesses that don’t already have a cybersecurity strategy in place.
This is where Tech Advisors can help. An MSP provider offers expert IT and cybersecurity services on a contract basis. An MSP might serve as your sole IT provider or collaborate with your in-house team.
Below are some of the ways that a managed service provider can help you comply with the FTC safeguards rule.
- Risk Assessment: When you start working with an MSP, they will conduct a thorough assessment of your existing operations and systems to identify possible risks.
- Security Program Implementation: After conducting a risk assessment, an MSP will help you develop and implement a security program to comply with the FTC.
- Employee Training: Your MSP can provide employee training and testing to ensure that your entire team is up to speed on the latest cybersecurity threats and best practices.
- Ongoing Monitoring and Testing: Finally, MSPs can provide 24/7 system monitoring to help you catch and respond to digital threats in real time.
