Cyber Security and Data Management

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Cyber Security and Data Management THE EVOLVING LAW AND PRACTICE ON DELETING LARGE VOLUMES OF OLD DATA TO REDUCE CYBER RISK Presented by Avi Gesser, Davis Polk Litigation Partner Gabriel Rosenberg, Davis Polk Financial Institutions Group Partner Matthew Kelly, Davis Polk Litigation Associate October 11, 2017 Davis Polk & Wardwell LLP CLE CREDIT AVAILABLE WWW.CYBERBREACHCENTER.COM

Topics Overview Balancing preservation obligations and cyber risk Regulators expectations on data deletion and cyber risk Tools & techniques for effective data management: predictive coding, data analytics Practical challenges, including managing disassociated data (e.g., from former employees, closed litigation matters) 1

Data Management Is Essential For Effective Cybersecurity How are data management and cybersecurity connected? Cybersecurity is about the protection of sensitive information from bad actors Growth in volume of data means more data that is at risk Variety of storage locations provides more opportunities for cyberattacks 2

How Did We Get Here? Pre-Crisis Caselaw Developed in ad-hoc, case-by-case manner. Decisions arose only where something had already gone wrong. Difficulty in deciding what to keep leads to extreme bias against deletion. Post-Crisis Litigation Entire industries subject to suit or investigation. Many retention policies (such as they were) suspended. Complex cases with long timelines prevent re-introduction of policies. Big Data Data storage gets cheaper; indexing/analysis tools more widely available. Enthusiasm for Big Data initiatives drives active accretion of data. Overall culture shift in favor of data retention. 3

Keeping Everything is No Longer Viable It s expensive It s tricky to protect It s unsearchable It s unhelpful for litigation 4

Changes to the Federal Rules on Electronic Discovery Advisory Committee Notes to FRCP Rule 37(e) read: The existing rule has not adequately addressed the serious problems resulting from the continued exponential growth in the volume of [ESI]. Federal circuits have established significantly different standards for imposing sanctions or curative measures on parties who fail to preserve electronically stored information. These developments have caused litigants to expend excessive effort and money on preservation in order to avoid the risk of severe sanctions if a court finds they did not do enough. Adverse inference sanctions only to be imposed where: A document existed and should have been preserved; The document was destroyed due to a party s failure to take reasonable steps to preserve it; The document cannot be restored or replaced through additional discovery; and The party that destroyed the document acted with intent to deprive another party of the information s use in the litigation 5

Changes to the Federal Rules on Electronic Discovery (cont.) Hefter Impact Tech. v. Sport Maska Inc., 2017 WL 3317413 (D. Mass. Aug. 3, 2017) Defendant wiped laptop containing responsive documents after litigation-hold was in effect. Spoliation sanctions under 37(e) were not appropriate because documents were deleted as part of a companywide policy to wipe computers of employees taking maternity leave. No evidence defendant wiped employee laptop with intent to deprive plaintiff of evidence. 6

Changes to the Federal Rules on Electronic Discovery (cont.) Martinez v. City of Chicago, 2016 WL 3538823, at *24 (N.D. Ill. June 29, 2016) Defendant not subject to spoliation sanctions for failure to preserve video evidence. No evidence of bad faith and court unwilling to infer bad faith based on speculation. Severe spoliation sanctions require more than negligence or gross negligence. 7

Changes to Regulations NY DFS Regulation 23 NYCRR 500.13 Obligates financial institutions to have: policies and procedures for the secure disposal on a periodic basis of Nonpublic Information [ ] that is no longer necessary for business operations or for other legitimate business purposes of the Covered Entity, except where such information is otherwise required to be retained by law or regulation, or where targeted disposal is not reasonably feasible due to the manner in which the information is maintained. 8

Changes to Regulations (cont.) FTC s Five Key Principles to Protect Personal Information 1. Take Stock Know what personal information you have in your files and on your computers 2. Scale Down Keep only what you need for your business 3. Lock It Protect the information that you keep 4. Pitch It Properly dispose of what you no longer need 5. Plan Ahead Create a plan to respond to security incidents 9

Changes to Regulations (cont.) Regulation EU 2016/679 (GDPR) Core Principles (Article 5): Purpose limitation Data minimization Storage limitation Right to Erasure (Article 17): Places obligation on companies to erase personal data without undue delay once requested ECJ confirmed in 2014 the right to be forgotten (Google vs. Spain) 10

Why is it so hard to start? Starting the process requires: Time and money Clear ownership for the task (IT, legal, risk, compliance etc.?) Handling diffuse and diverse data sources Technical expert knowledge Reliable technical solutions Legal decisions throughout the process 11

Why Now is the Time to Start & How to Start How do you start? Get system in place for new data Start small Start with oldest data How do you start with recent data under holds and regulatory requirements? Search terms alone are too blunt Combine search terms and data analytics 12

How to Start Hold for Pets 100,000 100,000 20,000 No Hold/ Regulatory Obligations Keep Can Be Deleted 2012 2013 2014 2015 2016 2017 13

How to Start (cont.) Hold for Pets 100,000 20,000 100 Responsive Responsive 100 Responsive 100 100 Responsive Run Pet Search Terms 100 Responsive Responsive 200 2013 2014 2015 2016 2017 14

How to Start (cont.) 95,000 5,000 Dogs Cats Hamsters Fish Save Bucket Hit on Search Terms Delete Bucket Did Not Hit on Search Terms 15

How to Start (cont.) Most Pets 100 60 Review top of Delete Bucket for Responsive Documents Fido, Goose Run Analytics 40 Least Pets Cat Food Dog Collar Save Bucket Review Bottom of Save Bucket (Should be False Positives) Delete Bucket 0 16

How to Start (cont.) 50 100 Search Term Hits and Responsive Documents Identified in Garbage Bucket Review random sample in Garbage Bucket 50 Save Bucket 0 Delete Bucket 17

How to Start (cont.) 50 100 50 Save Bucket 0 Delete Bucket 18

How to Start (cont.) Complexities How do you handle custodians who are subject to multiple holds? How do you handle custodians who have multiple copies of the same emails? How can you group custodians together when doing this analysis? 19

How to Start (cont.) Risks/Challenges How susceptible are the holds to analysis by the analytics? Are topics too nebulous to be captured by linguistic algorithms? How rich is the data? What if something that should have been preserved is deleted? Combining search terms and data analytics using this protocol should mitigate most of these risks 20

Questions? Visit: www.cyberbreachcenter.com 21