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Let’s face it — data security is significant problem for corporate America.  If you don’t think so, here’s a statistic that may help convince you: in Q1 2019 alone, there were 1.9 billion records exposed. In fact, a business falls victim to a ransomware attack every 14 seconds.  That’s right — every 14 seconds.  In fact, the global cost of online crime is expected to reach $6 trillion by 2021.  Sadly, there are lot more statistics where those come from, and they are not encouraging.  Suffice it to say that businesses must take their cybersecurity very seriously.  Thankfully, may companies already take steps to secure their data, but oddly, many companies think that such measures are an IT function and that any data security program does not merit serious “board-level” oversight. Such an approach is asking for trouble, in more ways than you may think.

Let’s set a foundation that every company must understand: data security is not solely an IT function.  Don’t take my word for it — the National Association of Corporate Directors (NACD) Director’s Handbook on Cyber-Risk Oversight lists five (5) core principles that are applicable to board members of public companies, private companies, and nonprofit organizations of all sizes and in every industry sector.  The first of those principles is to understand and approach cybersecurity as an enterprise-wide risk management issue, not just an IT issue.  Granted, the nature of the threat lends itself to initiating reports through the IT Department, but there can be no question that the impacts are organization-wide. Moreover, social engineering remains a big factor in data breaches; in fact, about 91 percent of attacks launch with a phishing email. When it comes data security and the role of the board, treating data security as a technology-centric issue is a big part of many data breaches.  This begs the question: can directors and officers be held liable for a data breach?  Although the answer to that question is not a given, the trend does not bode well for an answer in the negative.

In 2014, SEC Commissioner Luis Aquilar stated that “boards that choose to ignore, or minimize, the importance of cybersecurity oversight responsibility do so at their own peril.”  Officers and directors have a duty of care to the corporation, and shareholder derivative claims premised upon the harm to company due to a data breach continue to push for liability. The Delaware Chancery Court held in In re Caremark International Inc. Derivative Litigation, 698 A.2d 959 (Del. Ch. 1996) (“Caremark”) that the board has an obligation to at least attempt in good faith to invest in or implement a monitoring system that’s sufficient to identify legal breaches by the corporation. In Caremark, shareholders (plaintiffs) brought derivative suits against the company, alleging that Caremark’s directors (defendants) breached their duty of care by failing to adequately oversee the conduct of Caremark’s employees regarding payments to doctors to refer Medicare or Medicaid patients to Caremark’s services, thereby exposing the company to massive civil and criminal penalties. Although the parties negotiated a settlement, the board did not agree to any monetary penalties — it simply agreed to implement a number of more cautious policies moving forward, such as the creation of a compliance and ethics committee.

The importance of Caremark is that the holding outlined director liability for a breach of the duty to exercise appropriate care in two distinct contexts: (i) “from a board decision that results in a loss because that decision was ill advised or ‘negligent,’” or (ii) “from an unconsidered failure of the board to act in circumstances in which due attention would, arguably, have prevented the loss” (emphasis added).  The court further held that:

[I]t is important that the board exercise a good faith judgment that the corporation’s information and reporting system is in concept and design adequate to assure the board that appropriate information will come to its attention in a timely manner as a matter of ordinary operations, so that it may satisfy its responsibility.

Bottom line: For liability to attach, the board must have failed to provide reasonable oversight in a “sustained and systematic fashion,” or the information reporting system which the board relied on must be deemable as an “utter failure.”

Although not a data security case, the holding is important in the context of data security.  Why? Because Caremark essentially states that a board of directors can’t assume their corporation is complying with the law — there must be a reporting system so that the board can exercise oversight.  Recently, the Delaware Superior Court breathed more life into that point in Marchand v. Barnhill, et al., No. 533, 2018 (Del. Sup. Ct. 2019) (“Marchand”).  This case arose out of a listeria outbreak involving Blue Bell ice cream that sickened many consumers, caused three deaths, and resulted in a total product recall.  In reversing the dismissal of stockholder suit asserting Caremark claims against Blue Bell Creameries, Inc., the Marchand court held that the board failed to provide adequate oversight of a key risk area and thus breached its duty of loyalty.  Remember the context of breach of corporate duty in Caremark: (a) the directors must have utterly failed to implement any reporting or information system or controls; or (b) having implemented appropriate compliance controls, the directors consciously failed to monitor or oversee the operation of that system.  Under the Marchand facts, the court found a lack of board oversight because the Blue Bell board allegedly failed to implement any system to monitor Blue Bell’s food safety performance or compliance.  Sound like something that *may* apply in the cybersecurity context?  Yep.

I realize that there has not (to my knowledge) been a holding in a shareholder derivative lawsuit of officer and director liability arising out of a data breach, but if Marchand is any indication, it seems that the trend is moving towards potential liability where Caremark claims are asserted and proven.  This potential liability, however, can be thwarted if a board follows what I refer to as the “Four Cs”:

• Communication – There should be communication at all levels within the organization, but especially up to the board.

• Consideration  – There should be consideration of both technical and non-technical measures to ensure data security.

• Cooperation  – There must be cooperation across all levels within the reporting chain so that not only reporting mechanisms are satisfied, but that the board can satisfy its oversight responsibility.

• Coordination – There must be coordination among both internal and external teams so that any information security plan not only addresses internal requirements, but third-party service providers.

As you can see, these “Four Cs” can help avoid any “utter failure” to implement appropriate reporting or information systems or controls, as well as any failure to monitor or oversee such compliance.  Of course, adhering to them is not necessarily an officer and director “get out of liability free” card for a data security breach, but it will certainly prod your company (or client) in the right direction.  More importantly,  don’t have your company (or client) delay implementing something along these lines concerning data security: if you wait, it just may be(come) too late.

Tom Kulik is an Intellectual Property & Information Technology Partner at the Dallas-based law firm of Scheef & Stone, LLP. In private practice for over 20 years, Tom is a sought-after technology lawyer who uses his industry experience as a former computer systems engineer to creatively counsel and help his clients navigate the complexities of law and technology in their business. News outlets reach out to Tom for his insight, and he has been quoted by national media organizations. Get in touch with Tom on Twitter (@LegalIntangibls) or Facebook (www.facebook.com/technologylawyer), or contact him directly at tom.kulik@solidcounsel.com.

Some of the most intelligent, interesting, and high-achieving people I know are lawyers. Yet, few people would describe most law firms as anything close to “innovative.”

In my lifelong quest to encourage innovation in law, I had a conversation with Alicia Ryan, who leads the practice innovation group at Fenwick and West. She left her high stakes M&A practice to help a law firm embrace 21st century technology and social trends, developments, and innovations. According to Alicia, there are well-known historic and systemic reasons for the slower rate of innovation in law firms.

She explains, “For one, some law firms can lack disruptive competition. The billable hour model can also make things challenging. And then there’s the culture of ‘following the precedent.’” Alicia believes that new market realities are coming to law firms. According to Alicia, “The need to innovate at law firms is real. And, many folks are increasingly engaged on the subject.”

So, if you want to further the innovation effort at your firm, here are some of the best practices, according to Alicia, for getting around the institutional barriers to innovation that we all face as lawyers.

Create a Sense of Urgency

Alicia is convinced that change won’t happen unless people believe it is necessary. She explains, “New market forces are on your side and can make this an organic process.”

So, where to start? Alicia recommends talking to the people in your firm who are close to the “pain.” “Those in finance or client marketing face challenges firsthand,” she explains. She advises to “find out which practice groups or tasks are facing the most price pressure. Find out which of your peer firms are innovating and whether those innovations are viewed by partners or management as competitive threats.”

According to Alicia, if you go through this exercise, you’ll learn where innovation efforts can be most impactful. That is also where they will be more eagerly received. It’s where you’ll find more enthusiasm and open minds. Most importantly, “You’ll also learn which executives or partners are likely to champion which types of efforts,” Alicia says.

Allocate Adequate Staff Resources – Time & Expertise

Once you’ve got buy-in and a partner champion for your innovation project — like bringing on a new AI tool or piloting a robotic process automation (RPA) initiative (yes, think big!), you may think you’re ready to go. But Alicia cautions, “Don’t underestimate how high-touch managing innovative change can be! People want to see the change, but also are afraid of uncertainty and risk.”

Alicia advises to actively hold hands and manage expectations throughout the entire process. “Sending a few emails with instructions and some marketing blurbs won’t generate usage and adoption,” she explains. According to Alicia, “You’ll need staff resources and experts for whom this is a priority. They’ll need training and a mandate to stick with the project and be a resource for users for the first year of its use.”

Incentivize People to Help

Alicia explains, “It goes against human nature, especially the nature of humans who bill by the hour, to work more slowly NOW in order to go faster LATER.” But according to her, your communication plan will clarify this as you outline the vision and goals while highlighting successes.

But how can you really get people motivated to learn a new tool or update a form document? Alicia explains, “In the former case, we’ve seen peer presentations have a powerful effect. When associates who are proponents of a new tool or process present their experiences to the rest of the group firsthand, others want to get on board.”

“In many cases, your efforts will be more fruitful if you can get a bucket of billable credit hours approved in advance,” she notes. Make sure you rally up a big army of people to help. Alicia explains, “Need associates to help create and maintain forms for the corporate group? Offer some billable credit for that work. It’s an incentive, but it’s also about removing obstacles. Find out what keeps people from driving or adopting change, and start chipping away at those obstacles.”

Innovation doesn’t have to be slow and painful. It doesn’t have to be painful at all. It is a tremendous opportunity and a huge benefit to a profession that can be stuck in its ways. In fact, the greatest challenges of innovation in law may have nothing to do with innovation itself, but in convincing the risk-averse professionals of its benefits.

That’s where you come in. Arm yourself with knowledge, open-mindedness, and stubbornness to meet the stubbornness of those around you. Change doesn’t always come easy, but it’s worth it in the end! Please let me know if you have other tips for innovating in law. I would love to share with everyone.

Olga V. Mack is the CEO of Parley Pro, a next-generation contract management company that has pioneered online negotiation technology. Olga embraces legal innovation and had dedicated her career to improving and shaping the future of law. She is convinced that the legal profession will emerge even stronger, more resilient, and more inclusive than before by embracing technology. Olga is also an award-winning general counsel, operations professional, startup advisor, public speaker, adjunct professor, and entrepreneur. Olga founded the Women Serve on Boards movement that advocates for women to participate on corporate boards of Fortune 500 companies. Olga also co-founded SunLaw, an organization dedicated to preparing women in-house attorneys to become general counsels and legal leaders, and WISE to help female law firm partners become rainmakers. She authored Get on Board: Earning Your Ticket to a Corporate Board Seat and Fundamentals of Smart Contract Security. You can email Olga at olga@olgamack.com or follow her on Twitter @olgavmack. 

In 1984, what lawyer successfully defended Nintendo against Universal Studio’s claims of trademark infringement (they claimed Donkey Kong improperly infringed upon King Kong)? As a show of gratitude, Nintendo named a young, pink alien character after the attorney.

Hint: At the time of the representation, he worked at the now defunct Mudge Rose Guthrie Alexander & Ferdon, before joining Latham & Watkins in 1995, chairing the New York office’s litigation department.

See the answer on the next page.

Welcome to our latest article in the monthly “An Interview With” series. In this series, I  connect with people from all parts of the legal profession and at all stages of their legal career to learn who really makes up the legal community and what they are actually doing with their legal degrees. 

This month, I chatted with an immigration attorney and the owner of Lacroix Law, Miriam Lacroix. Miriam is a 2014 graduate of the Elisabeth Haub School of Law at Pace University. Today, Miriam runs her own solo practice, where she provides legal services and peace of mind to immigrants navigating their path to legal status.

In this article, we’ll learn about Miriam’s journey to becoming a solo practitioner, some of the challenges she faces running a small business, and what it is really like to be an immigration attorney in 2019. 

KS: Tell us about your journey to becoming a solo practitioner and small business owner. 

ML: Having my own practice became a dream of mine in law school. As a student, I participated in an immigration clinic, where I represented clients in their immigration cases as a student attorney. After law school, with my future private practice in mind, I became a part of the inaugural class of the  Immigrant Justice Corps, where I served as a Fellow at the City Bar Justice Center. After training and experience, I felt prepared to finally realize my dream of owning my own law firm. 

KS: What do you love about running your own practice and being your own boss? Conversely, what are some challenges that come with being a small business owner? 

ML: Although I love being a lawyer and representing clients, I have to say that my favorite part of what I do is the business aspect. I love making new relationships with other professionals, engaging with people via social media, conducting presentations, and being creative with how I offer more value to my clients. I’m obsessed with the idea of a law firm that is organized and streamlined and can run without me. That’s the goal I am working towards. 

Being a small business owner comes with the challenge of being the boss and being responsible for every decision. Although I like to think that I know everything, that is absolutely not the case. One of the hardest parts for me is the fear of making the wrong decisions. I’m grateful for my colleagues, who I rely on for support and advice. 

KS: I know this question is a bit of a trap for business owner, but describe what your typical workday looks like.

ML: It is definitely a trap because no two days are the same. Typically, I split my day up in blocks. I have blocks to do legal work, to return and make phone calls, and to work on marketing, sales, finances, and even admin work. Sometimes, though, I have a day where one of these blocks takes up the whole day! I don’t go to court as much anymore, but some days I have appearances in Immigration Court for hearings or USCIS for interviews. 

KS: What drives your passion to practice immigration law? 

ML: This is a really good question. Given the current climate, it is so easy to get discouraged. However, my clients, their resilience, their stories, and the fact that I’m often giving someone a chance that they couldn’t have accomplished on their own drives me. My clients are always so grateful, no matter the result, because they appreciate the effort. I am passionate about the freedom of movement and uniting/reuniting families. This administration’s heartless treatment of children and families definitely drives me to want to combat it every chance I get. 

KS: Immigration is a topic that gets a lot of news coverage these days. Can you tell us a little bit about the realities of practicing immigration law under the current administration?

ML: Under the current administration, immigration practice has become very difficult. Things change so often that immigration lawyers are unsure how to advise our clients. I find myself saying “maybe” or “it depends” a lot more now than ever. In addition, ICE enforcement has become increasingly more intense, causing fear in immigrant communities. This administration prioritizes all unauthorized immigrants, which is a stark difference from the Obama administration, which prioritized national security threats, such as people with a serious criminal history, and recent border crossers. Back then, a lot of clients had less to worry about because they didn’t fall into one of those categories. Now, I am in the position of wondering whether my clients, who have been in the U.S. for 20-30 years with no criminal history, will be picked up by ICE if, for example, their application for an immigration benefit is denied for some reason. 

You’ve got to have some thick skin, perseverance, and patience when practicing immigration under this administration. 

KS: What advice do you have someone who is interested in starting their own legal practice right out of law school or very early in their career? 

ML: I would say to definitely get a support system outside of your family. Contact friends, colleagues, and possible mentors who you can bounce ideas off of and ask legal questions. When you start a practice right out of law school, you have the double duty of learning how to run a business, while also learning how to practice law/be a lawyer. Those are both very difficult and time-consuming things. In addition, keep in mind that you will make mistakes, you will have ups and downs, and you WILL have some bad months. Take it from me. That is all part of the territory. Don’t get discouraged. I know this sounds cliche, but keep your eyes on the prize. Keep in the back of your mind why you’re doing this because you will need that motivation on a rainy day. And one last piece of advice is to value yourself. Oftentimes when we are new lawyers, we tend to think that we can’t charge too much. Who are we to charge as much as the woman/man down the street who’s been doing this for so long and has years of experience? That is the wrong way to think! Your knowledge, education, experience, and work is what qualifies you to be paid adequately for your work. Do not sell yourself short. You are providing a service that your clients need and their lives are better for it. It took me a while to learn that, but once I did, I saw a huge difference.

You can learn more about Miriam here.

Know someone who would be great to profile in this series? Send an email to info@vincoprep.com with “An Interview With” in the subject line.

Kerriann Stout is a millennial law school professor and founder of Vinco (a bar exam coaching company) who is generationally trapped between her students and colleagues. Kerriann has helped hundreds of students survive law school and the bar exam with less stress and more confidence. She lives, works, and writes in the northeast. You can reach her by email at info@vincoprep.com.

Online retailer Amazon has taken a step into the legal services industry, launching a curated network of IP law firms providing trademark registration services at pre-negotiated rates.

The goal of the new Amazon Intellectual Property Accelerator is to help companies more quickly obtain IP rights for their brands and access to brand-protection features in Amazon’s stores. It specifically targets small- and medium-sized businesses by making it easier and more cost effective for them to protect their ideas.

“Expert legal guidance is critical for businesses to protect their brands and avoid costly mistakes in the trademark filing process,” wrote Dharmesh Mehta, Amazon’s VP of customer trust and partner support, in a blog post announcing the program. “IP Accelerator solves this challenge by connecting businesses with a curated network of trusted IP law firms that provide high quality trademark registration services at competitive rates to help brands secure a trademark.”

Amazon so far has approved 10 law firms to participate in the program, including FisherBroyles; IdeaLegal; The Sladkus Law Group; McCormick, Paulding & Huber; and Dunner Law.

While these 10 firms are all U.S.-based and focused on U.S. trademark applications, Amazon says it plans to expand IP Accelerator in the future to support trademark applications in other countries. A company need not be a seller on Amazon to work with an IP Accelerator law firm.

These firms have agreed to maximum fees for specified services, including $500 for a trademark search, $600 for a trademark application, and $1,800 for a comprehensive brand review. The company pays nothing to Amazon and contracts directly with the law firm.

Amazon says it has vetted each of these firms for experience, expertise, and customer service. As with other offerings on Amazon, firms’ listings will include customer reviews.

In addition to easier, fixed-fee access to legal services, the accelerator offers companies a secondary benefit. Amazon says that because it has thoroughly vetted these law firms, companies that use them will be “strong candidates for registration.”

For that reason, Amazon says, it will offer the companies access to brand-protection features within its platform, months or even years before a trademark registration officially issues.

“Brands will benefit from automated brand protections, which proactively block bad listings from Amazon’s stores, increased authority over product data in our store, and access to our Report a Violation tool, a powerful tool to search for and report bad listings that have made it past our automated protections,” Mehta’s blog post explains.

Amazon’s Entrée into Legal Services?

Amazon has a strong self-interest in fighting counterfeits and protecting the brands of the businesses that sell on its platform. For that reason, providing easier access to IP law firms makes sense for Amazon, as well as for its sellers and ultimately its customers.

But could this be a first step for Amazon in providing broader access to legal services?

The listings for these new IP Accelerator law firms appear within Amazon’s Service Provider Network, a site that already provides Amazon sellers with access to “trusted local providers” of services in fields such as accounting, advertising, compliance,  shipping, tax registration, and more.

If it benefits its sellers to help them with IP services, might Amazon follow with providing access to legal services providers in other areas that would benefit them, such as corporate or employment law?

And if Amazon is successful at building legal networks to serve its sellers, might it take that a step further and build networks of law firms to offer their services to its customers at large?

It is not hard to imagine a time when Amazon offers curated networks of lawyers providing services at pre-negotiated rates in areas such as family law, immigration law, and estate planning.

This is pure conjecture, of course. But when you start to think of Amazon as the next LegalZoom, the biggest question may be, “Why not?”

Robert Ambrogi is a Massachusetts lawyer and journalist who has been covering legal technology and the web for more than 20 years, primarily through his blog LawSites.com. Former editor-in-chief of several legal newspapers, he is a fellow of the College of Law Practice Management and an inaugural Fastcase 50 honoree. He can be reached by email at ambrogi@gmail.com, and you can follow him on Twitter (@BobAmbrogi).

The country will set up an alternative stock market for small enterprise companies: Mnangagwa

PENTAGON: The Pentagon’s top lawyer has ordered the collection of all documents related to the Ukraine military aid at the center of the House impeachment investigation.

In a letter sent across the Pentagon, General Counsel Paul Nay directed officials to “preserve all documents, records, and writings, and any associated attachments, in any format,” that relate to the Ukraine Security Assistance Initiative, and direct any requests from outside the department Office of Information Counsel. The letter was made public today. 

DoD spokesman Jonathan Hoffman told reporters Thursday that gathering the relevant materials is meant “to ensure that all appropriate department information is available on this matter,” adding that “DoD offices should provide any pertinent documents and records to the Office of General Counsel for cataloguing and review.”

House Democrats launched an impeachment investigation after a White House whistleblower flagged a July 25 conversation between Trump and new Ukrainian President Volodymyr Zelensky, in which Trump asked for a “favor,” suggesting an investigation by Ukraine of former Vice President Joe Biden and his son, Hunter. Biden is the Democratic front-runner to challenge Trump in next year’s presidential election. The administration had ordered a last-minute review of Ukrainian military aid, holding up its release for several months. Following the call and whistleblower complaint, the House Intelligence Committee’s chairman, Adam Schiff, asked for a copy of the Intelligence Community’s whistleblower’s complaint on Sept. 10. Congress was notified that the Ukrainian aid was released by the administration the next day.

Hoffman was unable to provide details on when Pentagon leaders were first made aware that the $250 million aid package had been frozen, or why. Some Republican lawmakers like Lindsey Graham have suggested the hold came at the behest of the Pentagon, which allegedly considered Zelensky an unknown quantity. However, DoD had certified in May that Ukraine had made enough progress on addressing corruption to allow the assistance to flow without worry.

The July 25 call came several days after Defense Secretary Mark Esper was confirmed for the job. Hoffman said Esper was not on the call, in which Trump asked Zelensky for “a favor” after Zelensky bought up the delivery of Javelin anti-tank missiles.

Hoffman downplayed the significance of the document scrub, calling it “a fairly standard practice that when there’s a significant level of congressional or [inspector general] interest in a matter.”

The type of paper and electronic files that will be swept up in the General Counsel’s effort include records and conversations held inside the building and with other agencies centered on the aid delay.

Asked why Esper was not on the Ukraine call, Hoffman brushed off the need for Esper’s involvement. “The secretary has an incredibly busy schedule, he doesn’t spend most of his days sitting in on other people’s phone calls,” he said.

Asked about the Ukraine situation late last month, the SecDef responded, “I’m not going to get into any of that right now. I’m trying to keep DoD out of politics.” Esper pledged at his first news conference to keep the Defense Department apolitical.

European Command chief Gen. Tod Wolters, speaking to reporters at the Pentagon on Thursday, said he has had “zero conversations” with foreign counterparts about military funding for Ukraine. “I haven’t had any conversations with my mil-to-mil counterparts or with anybody, about concerns over investments in the Ukraine,” he said.

One of the key pieces of equipment the Ukrainian government has been eager to receive, as evidenced by Zelensky’s comments during the call, are Javelin anti-armor missiles. Wolters said “you see a little bit of a bounce in the step of a Ukrainian soldier when he or she has had the opportunity to embrace this system that allows them to better defend their turf.” 

Just hours after Wolters sang the praises of the Javelin, the State Department announced it had approved the sale to Ukraine of another 150 of the missiles along with related equipment worth up to $39.2 million. The weapon, State said in a release, will help Ukraine “build its long-term defense capacity to defend its sovereignty and territorial integrity in order to meet its national defense requirements.”