It’s a perennial winner: “Controlling outside legal costs” is the top priority for corporate legal departments once again, according to the Legal Department Operations Index from the Thomson Reuters Institute.
The good news is you don’t have to sort it out on your own. By using an industry-leading spend management system, you can streamline your efforts and realize significant savings.
The need for a leading spend management system
Seasoned law department pros know that controlling outside counsel costs is complicated. You need strategies for keeping work in-house and efficiently using alternative legal service providers. You need a point-of-view on alternative fee arrangements versus the billable hour.
And then you have your dealings with the law firms themselves. You often have less pricing information than your law firms do. And when it comes time to check that the bills match the agreements, you and your team are in a time crunch and can’t always spot the errors.
Controlling spend has evolved into a sophisticated discipline within legal departments, with LDO leaders establishing best practices and working with the legal tech industry to align software capabilities to these approaches. Some of the best practices include making data-driven decisions, understanding the market rate for each type of matter in each region, getting standard timekeeper rates and reasonable rate increases, ensuring that your invoices match the billing guidelines.
These thought leaders have helped technology companies develop best-in-class spend management systems that can save your organization significant time and money. And you don’t have to go it alone.
Best practices in spend management
Leading legal teams have adopted several best practices to manage their spend effectively. These include the following:
Make data-driven decisions: Leading legal departments are leaning into using data to assess and improve all aspects of their operations. Spend management is no different. Having access to extensive and historical data for your own spending as well as for the rates and pricing practices of law firms in your area can help you make better decisions for your organization.
Understand the market rate: When timekeeper rates increase or you’re considering working with a new firm, you have traditionally been blind to market rates in your negotiations. Leading legal teams rely on systems that look at a vast pool of legal spend data to select, negotiate, and manage outside counsel.
Secure standard rates: Using your spend management system to set and maintain standard timekeeper rates for your outside counsel will help you with forecasting and budget control. The more variation in these rates, the more complexity you’ll have as you calculate your future spend. Using a leading spend management system will give you visibility into the current range of rates and provide benchmarking data to help you bring them all in line.
Ensure your invoices match the billing guidelines: Implementing ebilling and invoice approval automation will enable you to save time and reduce errors. You will eliminate paper approvals and automate currency conversion, timekeeper rate enforcement, expense compliance, and alternative fee arrangements. Leading legal teams use their systems to manage communication and invoice corrections with their outside counsel.
Case study: Supporting cost control, growth, and innovation
Ohio-based AtriCure is a fast-growing company founded on innovation. The company’s legal team has adopted industry best practices and uses Thomson Reuters Legal Tracker Advanced for spend management and e-billing.
Prior to implementing Legal Tracker, the team had no e-billing capability, and they tracked most billing and financial data manually. However, the company was growing fast, and the team needed to optimize and scale to support that growth. They implemented Legal Tracker to help automate tasks and solve major pain points, such as accelerating rate reviews, streamlining invoice review, and creating greater visibility over spend.
Melissa Bodner, director of Legal Operations, reports that the team has:
Dramatically reduced the amount of time it takes to conduct timekeeper rate reviews
Used the data and insights to negotiate better rates with law firms
Streamlined forecasting and budgeting
Automated their invoice review
“Essentially, Legal Tracker Advanced is paying for itself,” Bodner says. “It saves a huge amount of time. And the insights it gives us help us negotiate better rates with law firms.”
A shorter path to your spend management goals
Managing outside counsel spending will continue to be a high priority area for in-house legal teams. The corporate counsel community is rallying around this priority. Working with industry tech partners, it has established best practices that can help your organization save significant money, be sure your rates match benchmarks, and validate that your invoices match your terms.
By choosing a market-leading spend management tool, you are choosing a tool that puts you in line with these best practices and offers a shorter path to reaching your goals for controlling outside counsel costs.
Legal Tracker Advanced from Thomson Reuters is the industry leader in spend management software. Find out how it can help your legal team better negotiate with and manage invoices from your outside counsel.
Definition, concept overview and resources for in-house legal teams
Legal terms • security • convertible note
Highlights:
Convertible notes are a type of debt instrument that can be converted into equity at a future date
Often used by startups to raise early-stage funding
Key terms include: principal amount, interest rate, maturity date, conversion discount, and valuation cap
Can be advantageous for both startups and investors, but there are also some challenges and considerations to keep in mind
Jump to ↓
SAFEs vs. convertible notes
In the fast-paced world where startups are booming, globalization and innovation are not just limited to the products or services on offer; rather, they are extended to how these will be funded. Among the many financing options available, one instrument that has emerged as a viable option among early-stage investors and entrepreneurs is convertible notes.
The United States market witnessed a remarkable increase in convertible notes in the first quarter of 2023. As per a Goldman Sachs, US companies have issued more than $40 billion of convertibles across 63 deals, from $29 billion and 54 transactions in 2022. The constant rise in the use of the convertible note suggests a stable demand, reflecting their attractiveness as a flexible financing option.
Convertible notes bridge the gap between debt and equity, is revolutionizing how startups secure funding and scale their operations at the same time they ensure that the investor is presented with better options. But what exactly is a convertible note, and why has it become so popular?
What is a convertible note?
According to Black’s Law Dictionary, a convertible note is:
“A security (usually a bond or preferred stock) that may be exchanged by the owner for another security, esp. common stock from the same company, and usu. at a fixed price on a specified date. — Also termed (specif.) convertible debt; convertible stock.”
A convertible note is a short-term debt instrument or agreement that converts from debt to equity at a future date, usually when one of three key events occurs:
The company raises enough capital to reach a pre-determined benchmark.
The term of the loan expires.
The company is sold.
In simpler terms, the investors give loans to the startups in their early stage, at this moment the loan stands as a debt, but in the future the startup either pays back the loan amount with interest or, convert the loan into equity and becomes a shareholder in the company once it had time to mature and grow. The convertible note is like an agreement or contract which is negotiable by the parties to it, the agreement features the following:
Investor Rights
Amendments
Termination Terms
Repayment Terms/Conversion Terms
Partial Payment Option
Debt Guarantees
Use of Debt
A security (usually a bond or preferred stock) that may be exchanged by the owner for another security, esp. common stock from the same company, and usu. at a fixed price on a specified date. — Also termed (specif.) convertible debt; convertible stock.
Black’s Law Dictionary
What are the mechanics of a convertible note?
The convertible note purchase agreement (NPA) is the principal agreement between the issuer and the investors and sets out the price, terms, and conditions on which the investors agree to buy the convertible notes from the issuer.
Principal amount
Amount that has been invested by the Investor as a debt in the startup company is the Principal Amount, which acts as the loan’s face value.
Interest rate
Some convertible notes accrue interest on the principal amount when they are intended to be repaid as the loan (debt), although the primary benefit for investors generally lies in the conversion to equity rather than interest payments.
Maturity date
The date by which a convertible note must either be converted into equity or repaid with the interest accrued is the Maturity date.
Conversion discount
Conversion Discounts are offered to early investors which can range from 10% to 30% on the price per share during the next equity financing round.
Valuation cap
Valuation cap is the maximum company valuation limit at which the convertible note can be converted into equity, this is generally for protecting the investor’s interest from excessive dilution if the company’s valuation soars.
How are convertible notes advantageous for startup issuers and investors?
Issuer perspective
Convertible notes make it easy for startups to access early funding, which is required to establish the company. This allows startups to focus on growth and product development without getting down into traditional equity deals, ensuring they can scale efficiently and effectively.
Investor perspective
For investors convertible notes provide multiple benefits, such as it allows the investors to benefit from the conversion discounts and valuation caps if the startup raises equity at a higher valuation, securing more equity than through direct investment. On the other hand, it offers the mitigation of risk by the debt nature of the notes that is, if the startup fails to secure additional funding or becomes insolvent, then the investors can recover their investment as creditors.
What are the challenges and considerations for convertible notes?
If the company’s valuation cap is set too low, then there is a chance of dilution of founders and existing shareholders.
Convertible notes create uncertainty about the company’s future control and ownership, particularly when multiple notes convert simultaneously.
As it is well known that the process of traditional equity funds financing is complex, likewise convertible notes might not be that complex, but they still require careful legal drafting to ensure clarity on terms and conditions.
What is SAFE agreement and how does it differ from convertible notes?
A SAFE (Simple Agreement for Future Equity) is an agreement between an investor and a startup that lets the investor buy shares in the company later, usually during a future investment round. Unlike loans, SAFEs don’t have a set repayment date or earn interest, Investors don’t get shares right away but have the right to convert their SAFE into shares later, often at a discount.
Debt vs. equity
A SAFE is not a loan; it doesn’t have interest or a deadline for repayment. In contrast, a convertible note is a loan that earns interest and has a repayment deadline.
Complexity
SAFEs are simpler with fewer legal details, making them easier to manage. Convertible notes are more complex because they involve interest and repayment terms.
Investor risk
With a SAFE, investors may have to wait longer to get shares since there’s no deadline, but they don’t have to worry about the company not being able to repay. With convertible notes, investors have some protection because it’s a loan, but there’s a risk the company might not be able to repay or convert the loan if things go wrong.
Company preference
SAFE is preferred by companies that want to avoid the obligations of debt and the complexities of interest and maturity dates. Convertible Notes are often used when investors want the security of a debt instrument with the potential upside of conversion to equity.
Last thoughts and more resources
Convertible notes work like loans that earn interest and have a deadline for when they should either be repaid or turned into shares. This gives investors a clear idea of when they’ll get their money back or their shares, and it protects them from the risk of the company not paying back. Because of this, companies are motivated to get more funding or find an exit plan to avoid repaying the loan.
Convertible notes are a great choice for startups needing quick funding. They are flexible and save time since they don’t require complex equity discussions right away. For both startups and investors, convertible notes offer an efficient way to raise and invest money, making them a popular option for early-stage financing.
Disclaimer
The content appearing on this website is not intended as, and shall not be relied upon as, legal advice. Although this content was created to provide you with accurate and authoritative information, it was not necessarily prepared by attorneys licensed to practice law in a particular jurisdiction. This content was written by a writer with a legal background, but is not written by Practical Law attorney-editors. It is general in nature and may not reflect all recent legal developments. Thomson Reuters is not a law firm and an attorney-client relationship is not formed through your use of this website. You should consult with qualified legal counsel before acting on any content found on this website.
Definition, requirements, and more resources for attorneys
Legal terms • security • Rule 144
Highlights:
Rule 144 allows selling restricted, unregistered, or controlled securities publicly without registration if certain requirements are met.
Holding period is 6 months for public companies, 1 year for non-reporting companies, and up to 2 years for non-reporting companies.
Sufficient and current public information about the company must be available.
Selling limits for affiliates: can’t sell more than 1% of outstanding shares within any three-month period.
Jump to ↓
Rule 144 resources
Context and definition
When you hold restricted, unregistered, or controlled securities, selling them publicly can be challenging since the federal securities laws in the United States usually require them to be registered with the Securities and Exchange Commission (SEC) before being sold. However, there are exceptions to the registration mandate, and one of these exceptions is Rule 144, this regulation allows you to sell restricted, unregistered or controlled securities publicly without registration with certain requirements.
What are the requirements under Rule 144?
The following conditions are specified under Rule 144 to sell restricted, unregistered, or controlled securities:
Holding Period
For public companies, you must hold the securities for at least six months from the date you purchased them and fully paid for them.
The holding period is one year for companies that don’t file with the SEC.
For reporting companies, the period can be six months, while for non-reporting companies, it can range up to two years.
This holding period mainly applies to restricted securities, while control securities are subject to other Rule 144 conditions.
Public information
There must be sufficient and current public information available about the company.
This includes financial statements, details about the company’s officers and directors, and a business description.
Selling limits for affiliates
If you are an affiliate of the company like someone with control over the company, you can only sell a limited amount of the company’s shares. Specifically, you can’t sell more than 1% of the total outstanding shares within any three-month period.
For stocks listed on a stock exchange, you can sell the greater of 1% of the outstanding shares or the average of the previous four weeks’ trading volume.
Trading conditions
You must follow all normal trading conditions, meaning brokers can’t push to sell these securities, and they can’t charge higher-than-usual commissions.
Filing a notice
If you are an affiliate and plan to sell more than $50,000 worth of securities or more than 5,000 shares within three months, you must file a proposed sale notice with the SEC.
Case example concerning the requirement mandate
In the Securities and Exchange Commission v. Olines (No. C-07-6423 MMC (N.D. Cal. Mar. 12, 2010)) case, the court ruled that the defendants did not qualify for Rule 144’s “safe harbor” due to non-compliance with its conditions and were deemed “underwriters.” The court emphasized that meeting some Rule 144 conditions does not exempt them from being classified as underwriters.
What is legend, and why is it important?
Even after all the above conditions are met, there is one more thing to be done, which is the removal of the legend. A legend refers to a statement or notice on a stock certificate that indicates the securities are “restricted” and cannot be sold in the public market unless certain conditions are met. This is done to ensure that the potential buyer may be warned about the nature of the securities and that they have certain restrictions on the resale. Now, to get the securities in the market, the holder is supposed to make sure that the legend is removed.
Removal process
The legend removal process can be intricate, but it’s essential to follow these steps to legally sell your restricted securities in the marketplace.
Company’s consent: To remove the legend, the consent of the company that issued the securities is required. This consent is given in the form of an “opinion letter” from the issuer’s legal counsel stating that the securities are eligible for public sale under Rule 144 or another exemption.
Once you have the opinion letter, submit it to the transfer agent, who removes the legend. The transfer agent is the entity responsible for maintaining records of a company’s securities.
Only after the legend is removed can the securities be sold in the public market.
Who does rule 144 apply to?
Affiliates of the Issuing Company
If you’re an affiliate of the company that issued the securities like an executive, director, or significant shareholder, you must meet all the conditions of Rule 144 to sell restricted and controlled securities. This includes holding periods, public information requirements, and limits on the amount you can sell.
Non-Affiliates
For people who aren’t affiliated with the issuing company:
Held for over one year — If you’ve held restricted securities for over a year, you don’t need to meet Rule 144’s conditions to sell them. You can sell these securities freely.
Held for six months to one year — If you’ve held the restricted securities for more than six months but less than one year, and the company is a “reporting” company (one that files reports with the SEC), you can sell the securities as long as there’s current public information about the company.
More resources for legal professionals
Need to be an expert in Rule 144 by noon? Get legal know-how prepared by expert attorney-editors to monitor changes in the law, providing the questions to ask, and guidance through practice notes, standard documents and clauses, checklist, and toolkits.
For many in-house lawyers, it’s easy to understand the importance of the relationships between the general counsel and the CEO, CFO, CMO, and others key business leaders. But one often overlooked yet still critical relationship is the one between the general counsel and the supply chain management team.
As the Covid pandemic exposed, the logistics of the supply chain are critical to the success (or failure) of most companies. Outsourcing, uncertain global markets, political unrest, environmental issues (man-made or not), and basic capacity can all – along with many other factors – impact the ability of companies to get the goods and materials they need to conduct business.
Consequently, the relationship between the general counsel and the supply chain management function has taken on more importance than at any time in the past 50 years. The role of the general counsel (and by extension the legal department) goes way beyond merely reacting to legal issues; it involves proactive collaboration to support and enhance the supply chain function. Below we discuss what that entails.
Highlights:
The relationship between the general counsel and the supply chain management team is crucial for ensuring legal compliance, risk management, and operational efficiency.
Involvement of the general counsel in supply chain planning and decision-making helps anticipate legal issues and provide timely advice.
Embracing technology, fostering a culture of compliance, and developing a crisis management plan are essential steps for the general counsel to support and enhance supply chain operations.
Jump to ↓
What is supply chain management?
Supply chain management involves the coordination and management of a complex network of activities involved in producing, delivering, and returning goods and services. It encompasses the planning and management of activities involved in sourcing, procurement, conversion, and logistics. It integrates supply and demand management within and across companies, aiming to ensure the smooth (and efficient) flow of products, services, and information from suppliers to customers. The smallest hiccup can cause a chain-reaction that deeply impacts businesses and consumers all around the world.
Supply chain management involves the following:
Planning – forecasting demand, planning production schedules, and aligning supply chain activities with business objectives.
Sourcing – selecting suppliers who provide the necessary goods and services to meet production requirements. This includes negotiating contracts and ensuring that suppliers meet quality and delivery standards.
Production – converting raw materials into finished products.
Logistics – the movement, storage, and delivery of goods throughout the supply chain. This includes managing transportation, warehousing, inventory control, and distribution networks to ensure that products are delivered efficiently and on time.
Delivery –transporting finished products to customers on time.
Returns – the process of returning products from customers to the manufacturer or supplier.
The role of general counsel in supply chain management
Just a cursory glance at the above tells you that the general counsel (and the legal department) can add tremendous value when assisting the business with each of these objectives. Two areas jump out – legal compliance and risk management. One of the primary responsibilities of the general counsel is to ensure that each part of the company’s supply chain complies with all applicable laws and regulations. This includes import/export laws, labor laws, environmental regulations, and industry-specific standards. She also oversees the drafting, negotiation, and enforcement of contracts with suppliers, distributors, and other third parties, ensuring they are legally sound and protect the company’s interests.
Risk management is another critical area where the general counsel plays a vital role. By working with the business to identify potential legal and business risks and developing strategies to mitigate them, the general counsel proactively helps safeguard the supply chain from disruption. She does so by, among other things, ensuring the right type of insurance is in place, conducting due diligence on suppliers, implementing compliance programs, dealing with regulators, and providing guidance during crises such as breaches of contract, regulatory violations, or supply chain interruptions.
While these are both important, there is more for the general counsel to do. She should also assist in developing and implementing policies and procedures that govern the supply chain, ensuring they align with legal requirements and ethical standards (internal and external). She also helps ensure that supply chain practices are consistent with the company’s overall corporate governance framework, including environmental, social, and governance (“ESG”) criteria. Likewise, when disputes – inevitably- arise, the general counsel handles litigation and arbitration, negotiating settlements and resolutions to minimize litigation and its associated costs.
Lastly, the general counsel provides strategic advice on mergers, partnerships and alliances within the supply chain, ensuring they are structured to maximize benefits to the company while minimizing risks – for example a joint venture. In mergers and acquisitions, she reviews legal aspects of the target company’s supply chain and advises on integration strategies or necessary changes.
How the general counsel can be a better partner to supply chain management
To be an even better partner, the general counsel should partner with the head of supply chain logistics and otherwise get involved early in supply chain planning and decision-making. Consistent involvement allows the general counsel to anticipate legal issues and provide timely advice. Consequently, establishing regular meetings with supply chain leaders can help the general counsel stay informed about supply chain needs, challenges, and strategic initiatives and share their own thoughts and observations.
Here are some other areas where the general counsel can improve her value to this area of the business:
Education and training – developing and delivering training programs for supply chain personnel on relevant legal topics, such as contract law, compliance requirements, and risk management.
Reduce contracting friction – creating streamlined, user-friendly contract templates and implementing efficient contract review and approval processes can reduce delays and improve turnaround times.
Collaborative risk management – conducting joint risk assessments with the supply chain team to identify and address potential legal and strategic risks in supply chain operations fosters a collaborative approach to risk management, including compliance programs around supplier due diligence procedures, audits, and monitoring.
Strategic partner – developing a deeper understanding of the supply chain function, including its goals, challenges, and key performance indicators (KPIs), enables the GC to provide more relevant and practical legal and strategic advice.
Innovation – supporting the supply chain team in exploring and implementing innovative solutions, such as blockchain for supply chain transparency or AI for demand forecasting. When the legal department is flexible and open to new ideas and approaches it can further enhance efficiency and effectiveness for any part of the business.
Three things you should do next
Looking at the above and the current state of supply chain management, there are a number of things general counsel can do right now to help. Here are three:
Embrace technology – identifying and using advanced legal technology solutions can streamline legal processes and improve collaboration with the supply chain team. This includes adopting AI tools, Blockchain, contract management software, compliance tracking tools, and risk management platforms. Technology also covers data security, a critical aspect of proper supply chain management.
Foster a culture of compliance – everything starts with compliance. There are too many places where the supply chain can break because of failure to follow the right practices or the applicable laws.Promoting a culture of compliance within the supply chain function ensures that legal and ethical standards are embedded in everyday operations. Staying abreast of regulatory changes that impact the supply chain is essential. The general counsel should proactively monitor and communicate these changes.
Develop a crisis management plan – at some point, something is going to go wrong with the supply chain. Don’t let the business get caught flat footed.Creating acrisis management plan is crucial for responding effectively to major disruptions. The general counsel should work with the supply chain team now to develop and regularly update a crisis management plan, ensuring that the wide range of legal and operational challenges are considered as part of the planning.
The relationship between the general counsel and the supply chain management function is integral to the success and resilience of a company’s supply chain operations. By adopting a proactive, collaborative, and strategic approach, the general counsel can enhance this partnership, contributing to legal compliance, risk management, and overall operational efficiency.
If you are a Practical Law subscriber, you have access to numerous resources to help the supply chain team.
Time-saving tools that fit into your daily legal work
← Back to blog
Sterling Miller, HILGERS GRABEN PLLC
Sterling Miller is a three-time General Counsel who spent almost 25 years in-house. He has published six books, his newest is “The Productive In-House Lawyer: Tips, Hacks, and the Art of Getting Things Done” and writes the award-winning legal blog, Ten Things You Need to Know as In-House Counsel. Sterling is a frequent contributor to Thomson Reuters as well as a sought-after speaker. He regularly consults with legal departments and coaches in-house lawyers. Sterling received his J.D. from Washington University in St. Louis.
Definition, types, processes, and and how-to resources for litigators
Commercial litigation refers to legal disputes between individuals, excluding criminal charges. In these cases, parties may sue to uphold or defend a legal right, with the suing party seeking compensation in monetary damages or specific performance. This field covers a spectrum of disputes within the business realm, ranging from contract disagreements to shareholder or partnership disputes.
Is commercial litigation the same as corporate litigation?
The terms’ corporate’ and ‘commercial’ law might seem interchangeable for those not well-versed in corporate commercial law, but they govern distinct aspects of a company’s operations.
Commercial and corporate litigation distinguish themselves from other forms of litigation, primarily by the entities involved. When businesses are parties to a dispute, the issues tend to be more specialized than traditional civil litigation. The nature of commercial litigation often leads to higher costs, attributed to extensive steps in the litigation process, notably discovery and the involvement of forensic experts.
Unlike other forms of litigation, commercial disputes frequently go beyond national boundaries, requiring commercial lawyers to possess cross-jurisdictional legal knowledge and an awareness of commercial laws in relevant jurisdictions.
Key differences between corporate and commercial law
Corporate law
Corporate law — or business, enterprise, or company law — primarily oversees high-level corporate governance, regulation, structuring, financing, and management. It deals broadly with corporate governance and finance, impacting companies of all sizes throughout their lifecycle, including:
Incorporation and formation
Restructuring/reorganization
Mergers, demergers & acquisitions
Dissolution or liquidation
Corporate law often transcends national borders due to the international nature of modern business, necessitating cross-jurisdictional legal knowledge. Corporate lawyers are crucial in large-scale transactions, conducting due diligence, negotiating agreements, and overseeing financial aspects.
Commercial law
Commercial law pertains to the day-to-day facets of business operations, focusing on trade, commercial transactions, and business deals. Unlike corporate law, commercial law is more expansive, covering various legal areas such as:
Intellectual property law
International transactions and trade
It must be understood that commercial law is contract law, where lawyers advise on negotiating contracts, drafting key documents, ensuring brand trademark protection, and shielding clients from liability.
Roles of commercial litigators
Commercial litigation attorneys help businesses navigate the complex legal landscape of business disputes. Their education, training, and experience are tailored to address the unique challenges presented by business-related litigation.
Whether representing commercial clients or individuals in such cases, these attorneys shoulder specific responsibilities. In the case of commercial clients, a commercial litigator may be involved in various high-stakes tasks, including conducting due diligence, negotiating agreements, and overseeing the financial aspects of large-scale transactions. On the other hand, in the case of individuals in commercial cases, litigators may focus on addressing issues such as breach of contract, business torts, civil RICO claims, and shareholder disputes.
Impact of today’s market on commercial litigation
Influenced by political changes, economic shifts, regulatory updates, and technological advancements, the legal landscape continually shapes the commercial litigation environment. As commerce and the market evolve, commercial litigation demand remains constant.
Emerging technologies bring new challenges, such as patent infringement and breach of online contracts, expanding the scope of commercial litigation. High-tech companies, often engaged in high-risk and high-dollar litigation, play a significant role in the growth of the commercial litigation practice area. These companies, driven by innovation and intellectual property concerns, are frequently at the forefront of legal battles.
Types of commercial litigation
Fraud in commercial litigation refers to deceptive and dishonest practices that harm businesses or individuals financially. As businesses increasingly face complex and evolving challenges, the landscape of fraud litigation is continually shaped by dynamic trends.
A critical aspect is the heightened volume of fraud claims, indicating a growing awareness and pursuit of legal action in response to deceptive practices. Despite a reduction in claims issued in 2022, the overall trajectory demonstrates an increasing focus on addressing fraudulent activities through legal channels.
Business torts
Business torts are wrongful actions deliberately taken against a business to cause harm. These actions can result in various detrimental effects, such as lost profits, reputation damage, competitive advantage loss, and decreased market share. Business torts may be committed intentionally by competing businesses or arise from negligent behavior by individuals or other companies.
The primary purposes of tort laws related to business are to compensate the victim for losses incurred due to the wrongful action and deter future violations. Common types of business torts include:
Tortious Interference: Involves deliberate and unlawful interference in a company’s contractual dealings or business relationships, potentially leading to a breach of contract.
Restraint of Trade: This results in economic injury by impeding a business’s ability to conduct operations freely, encompassing activities that limit sales, trade, and interstate commerce.
Injurious Falsehood: This involves intentionally making false statements to damage another business’s reputation, requiring proof of malice to establish the falsehood.
Unfair Competition: When two businesses compete on unequal terms due to conditions favoring or disadvantaging certain competitors, preventing fair competition.
Fraudulent Misrepresentation: This involves deliberate deception for unfair gain, encompassing acts such as gestures, half-truths, or silence to mislead another person or business.
Creditors’ rights
Creditors’ rights are the array of tools available to creditors for collecting outstanding debts from debtors. This is applicable in both bankruptcy and non-bankruptcy contexts, offering creditors avenues to protect their interests when faced with challenges in debt collection.
When debtors declare bankruptcy or default on payments without responding to collection efforts, understanding the rights afforded to creditors becomes paramount. The specifics of these rights and the tools at a creditor’s disposal can vary depending on whether bankruptcy proceedings are involved. Exercising creditors’ rights is time-sensitive. Delays in exercising these rights decrease the likelihood of successful debt recovery. In many cases, debtors struggle with cash flow issues, managing payments to multiple creditors simultaneously. Proactive creditors, often those who take timely action, increase their chances of being prioritized in receiving payments from the limited funds available to all creditors.
Intra-business disputes in commercial litigations
These are the conflicts within a business entity that necessitate legal intervention. These disputes commonly arise in:
Shareholder disagreements
Partnership conflicts
Breaches of contracts
Intellectual property disputes
Employment issues
Corporate governance conflicts, and
Financial disagreements.
Shareholder disputes may involve governance or profit-sharing, while partnership disputes concern management or directional disagreements. Breaches of contracts, intellectual property conflicts, and employment disputes often lead to legal actions for resolution.
Corporate governance disputes focus on decision-making processes, and financial disagreements involve matters such as accounting practices. Resolving these disputes requires a structured legal process, including negotiation, mediation, arbitration, or court proceedings.
Shareholder derivative litigation
When an investor acquires stock in a corporation, they gain ownership rights. While the board of directors and executives manage daily operations, shareholders can, under specific circumstances, file a lawsuit on behalf of the corporation — known as a shareholder derivative action.
This legal action allows a shareholder to sue if the directors fail to pursue legitimate claims against those harming the company. Such suits often target officers, directors, accountants, or advisers for breaches of contract or fiduciary duty. Requirements for a derivative lawsuit vary by state law, with commonalities including the necessity for continuous ownership of company stock during the incident and resolution of the lawsuit. Shareholders must demonstrate efforts to alert the directors before filing, and court approval is typically mandatory for voluntary dismissal or settlement.
Breach of contract
Breach of contract is a significant aspect of commercial litigation, involving violating a legally binding agreement between parties. In a contract, the essential elements include an agreement, intention to create legal relations, capacity, and consideration. When any of these elements is absent, there is no valid contract. A breach occurs when one party fails to fulfill contractual obligations, leading to legal action by the other party.
The primary remedy for a breach of contract is damages, designed to compensate rather than punish. Damages aim to restore the injured party to the position they would have been in had the breach not occurred. Quantifying damages is a factual assessment involving proof of the contract’s existence, breach, factual causation, and the mitigation of loss. Parties may include a ‘liquidated damages’ clause in contracts, specifying the amount payable in case of a breach, providing certainty but subject to enforceability.
Besides damages, less common remedies in breach of contract cases include specific performance, where the court orders the breaching party to fulfill a specific contract term, and injunctions, compelling the party to rectify the breach or cease causing further damage. These equitable remedies are discretionary and not automatic.
Commercial and specialized types of litigations
Commercial litigation in the US shares commonalities with various specialized litigation types, but each area presents unique legal frameworks and focuses on distinct aspects. While commercial litigation involves a broad spectrum of business disputes, other types diverge in subject matter and regulatory contexts.
In UCC (Uniform Commercial Code) litigation, primarily applicable in the United States, the focus shifts to transactions and sales of goods, governed by a standardized set of commercial laws adopted by most US states.
Product liability litigation centers around claims against manufacturers or sellers for harm caused by defective products, navigating laws related to product liability, safety standards, and consumer protection.
Financial services litigation delves into legal issues within the financial sector, addressing concerns such as securities fraud, regulatory compliance, and professional negligence governed by financial regulations and securities laws.
Real estate litigation, on the other hand, deals with property-related disputes, including purchase agreements, leases, and development issues, navigating real estate laws, property statutes, and local zoning regulations.
The differences lie not only in the legal frameworks but also in the subject matter, industry regulations, and geographical scope. While commercial litigation pertains to various business conflicts, the other types specialize in transactions, product safety, financial services, and real estate, each with regulations and jurisdiction-specific considerations.
Complex commercial litigation
Complex commercial litigation is legal disputes involving intricate commercial transactions, often characterized by high stakes and multifaceted issues.
Black’s Law Dictionary (12th ed. 2024) recognizes megalitigation under the second gloss of litigation; a lawsuit itself — For example, “several litigations pending before the court.”
Megalitigation (1985) Civil, usually commercial, litigation that is extraordinarily complex, time-consuming, and expensive. — Also written mega-litigation.
Black’s Law Dictionary
Unlike standard commercial litigation, these complex cases frequently entail multiple parties, intricate operating agreements, substantial financial complexities, and the protection of valuable assets.
Various types of complex commercial litigation include:
Examples of complex commercial litigation
Antitrust litigation deals with allegations that a company’s business practices violate competition regulations, encompassing both civil and criminal aspects. It addresses issues related to market competition and potential monopolies.
In breach of contract cases, civil proceedings arise when an individual or company fails to fulfill promises made in a legally binding contract. This litigation involves principles of contractual law and remedies for breaching contractual obligations.
Consumer class action lawsuits involve individuals collectively suing a party that harmed them, addressing common grievances shared by similarly situated individuals, often seen in cases of defective products or privacy violations.
Regulation issues in litigation occur when a company fails to comply with industry regulations, leading to civil and criminal sanctions.
Securities litigation involves disputes between issuers of securities and individuals who invest in them, concentrating on compliance with securities laws and addressing issues related to financial markets.
Partnership or Shareholder Disputes — Addressing breakdowns in relationships among business owners that threaten the viability and value of their interests.
Intellectual Property Disputes — Concerning the violation or misuse of copyrighted, trademarked, or patented intellectual properties.
Trade Secret Claims — Enforcing restrictive covenants to protect against the release of trade secrets or confidential information.
First Amendment Cases — Instances where freedom of speech, religion, expression, assembly, or petition rights are suppressed or in question.
Fraud — Cases involving unlawful gains through intentional deception or unethical means, such as credit card fraud, wire transfers, bank fraud, and tax fraud.
Parting thoughts and resources
Commercial litigation, a multifaceted field within the broader realm of civil litigation, is vital in resolving disputes arising in the business world. Commercial litigators with specialized knowledge and experience navigate intricate legal issues, ranging from antitrust matters to breach of contract disputes. Commercial litigation adapts to new challenges as the market landscape transforms, ensuring its continued relevance in the dynamic world of business and law.
These cases involve intricate operating agreements, substantial financial complexities, and the protection of valuable assets. Litigators can access additional resources on Westlaw and Practical Law. These platforms offer comprehensive support for navigating the complexities of commercial litigation.
Disclaimer
The content appearing on this website is not intended as, and shall not be relied upon as, legal advice. Although this content was created to provide you with accurate and authoritative information, it was not necessarily prepared by attorneys licensed to practice law in a particular jurisdiction. This content is not written by Practical Law attorney-editors. It is general in nature and may not reflect all recent legal developments. Thomson Reuters is not a law firm and an attorney-client relationship is not formed through your use of this website. You should consult with qualified legal counsel before acting on any content found on this website.
The evolution of cyberthreats continues to outpace traditional cybersecurity measures, necessitating the adoption of advanced and innovative approaches driven by artificial intelligence (AI). As our digital footprint expands, AI’s role becomes more and more pivotal in safeguarding our information.
The world will need to cyber protect 200 zettabytes of data by 2025, according to a report by Cybersecurity Ventures. To put that in scale, a single zettabyte is equivalent to a billion terabytes. AI-powered solutions offer the agility, scalability and adaptability required to mitigate the risks associated with data breaches and malicious cyber activities that occur online.
What is AI’s role in cybersecurity?
Artificial intelligence is a branch of computer science that enables machines to mimic human intelligence through advanced algorithms and data processing capabilities. When used in cybersecurity, AI augments and enhances traditional methods by leveraging machine learning, deep learning and neural networks to detect, analyze and mitigate cyberthreats in real time.
Unlike conventional cybersecurity solutions which rely on predefined rules, AI-powered cybersecurity is dynamic and adaptive. It continuously learns from data patterns, user behaviors and network activities, enabling it to identify emerging threats and anomalies more effectively. By harnessing the power of AI, cybersecurity professionals can proactively identify and respond to cyberthreats before they cause harm.
Examples of AI in cybersecurity
AI is used in various aspects of cybersecurity, transforming the way we approach threat detection, monitoring and incident response. Some examples include:
Malware detection
Malware detection is a critical component of cybersecurity — malicious software can wreak havoc on computer systems and compromise sensitive data. Traditional antivirus programs rely on signature-based detection, scanning files for known malware patterns. This approach falls short when dealing with new or obfuscated malware variants that may evade detection.
Machine learning algorithms can analyze code patterns, behavior and other indicators of malicious activity. These AI-powered solutions learn from vast datasets of both malicious and benign software, enabling them to identify previously unknown or concealed malware variants with greater accuracy.
Network monitoring
Network monitoring involves the continuous surveillance of computer networks to detect and respond to suspicious activity. Traditionally, this process relies on predefined rules and manual analysis, which can be time-consuming and prone to human error.
AI changes this by automating and using smart analysis. Intrusion detection systems can now examine large volumes of network data for any unusual activity that might suggest a cyberattack. These AI-driven solutions establish what’s normal for a network and spot changes that signal danger.
Threat intelligence
Threat intelligence refers to the collection and analysis of data to identify and mitigate potential cybersecurity threats. AI plays a crucial role in this process because it automates the data collection and analysis. This helps security teams stay up to date on new threats, weaknesses and cyberattack methods.
For example, IBM’s X-Force Threat Intelligence platform utilizes AI to analyze extensive amounts of data from all over the internet, including the dark web, social media and security blogs. With the help of natural language processing and machine learning algorithms, it extracts relevant information and provides actionable intelligence on potential threats.
User and entity behavior analytics
User and entity behavior analytics (UEBA) analyzes patterns in user and entity behavior to spot unusual activity that might signal a security threat. UEBA platforms use algorithms to learn what normal user behavior looks like. Then, those same algorithms can identify any breaks from these norms that might indicate security risks.
By continuously monitoring user activities, system interactions and data access patterns, UEBA can detect insider threats, compromised accounts and other malicious activities that may otherwise go unnoticed. These AI-powered solutions can learn from historical data and adapt to changing user behaviors, providing timely alerts and enabling proactive incident response.
Automated incident response
Automated incident response is the process of automatically detecting, analyzing and responding to cybersecurity incidents without human intervention.
For example, Palo Alto Networks’ Cortex XDR platform uses machine learning to automate incident response tasks, including threat detection, analysis and remediation. It continuously monitors system activities, network traffic and user behaviors, using machine learning to spot possible threats. If it finds a threat, it can automatically take action, like isolating infected devices, stopping harmful traffic and starting incident response processes.
What are the benefits of AI in cybersecurity?
AI brings a new way of defending against digital threats that goes beyond traditional methods, providing powerful benefits for our online security. Some ways AI revolutionizes cybersecurity include:
Speed and scalability
AI in cybersecurity can process and analyze huge amounts of data incredibly fast, unlike traditional methods. For example, AI-powered systems can analyze terabytes of data in real time. This means they can quickly spot patterns, anomalies and potential threats with remarkable efficiency. This speed and scalability help organizations respond rapidly to cyberthreats, reducing the chance for malicious activities to cause harm.
Enhanced accuracy and threat detection capabilities
AI’s advanced algorithms and machine learning capabilities enable cybersecurity solutions to achieve a level of accuracy and threat detection surpassing traditional methods. By constantly learning from extensive datasets and adjusting to changing threat scenarios, AI systems can pinpoint even the most complex and concealed threats that might elude detection based on signatures or predefined rules.
This enhanced accuracy not only improves threat detection but also reduces the risk of false positives, minimizing disruptions and enabling security teams to focus their efforts on genuine threats.
Streamlined incident response and automation
Integrating AI in cybersecurity streamlines incident response processes and enables organizations to respond to security incidents with more efficiency. AI-powered security orchestration platforms can automate various tasks, such as threat analysis, containment and remediation. This helps reduce response times and minimize the potential impact of security breaches.
Proactive risk mitigation and continuous learning
Unlike traditional security measures that rely on static rules and signatures, AI systems can evolve and refine their threat detection models based on new data and emerging threats.
This proactive approach to risk mitigation helps organizations identify and mitigate potential threats before they can cause significant damage. By continuously learning and improving, AI systems ensure cybersecurity measures remain effective and relevant in the face of an ever-changing threat landscape.
What are the challenges of AI in cybersecurity?
While the benefits of AI in cybersecurity are many, it is crucial to acknowledge and address the potential risks and challenges accompanying these methods.
[h3] Adversarial attacks and manipulation
One of the primary risks associated with AI in cybersecurity is the potential for adversarial attacks and manipulation. Just as AI can be leveraged to enhance security measures, malicious actors may attempt to exploit vulnerabilities in AI systems or manipulate their decision-making processes through techniques like data poisoning or adversarial machine learning.
Cybercriminals have access to the same AI technologies used in cybersecurity, such as deepfakes, data poisoning techniques and advanced password-cracking algorithms. There is a continuous arms race between cybersecurity professionals and malicious actors — cybercriminals can leverage AI to bypass security measures or launch sophisticated attacks.
For example, cybercriminals could introduce carefully crafted input data designed to mislead or confuse an AI system, causing it to misclassify threats or make incorrect decisions. Such attacks can undermine the effectiveness of AI-powered security solutions and potentially introduce new avenues for cyberattacks.
Ethical considerations and bias
The use of AI in cybersecurity also raises significant ethical considerations, particularly regarding privacy, bias and decision-making transparency. AI systems are trained on massive datasets and any biases or inaccuracies present in the training data can propagate into the AI’s decision-making processes, leading to potentially discriminatory or unfair outcomes.
Furthermore, the opaque nature of some AI algorithms, such as deep neural networks, can make it challenging to understand and explain the reasoning behind their decisions, raising concerns about accountability and transparency.
Over-reliance and complacency
As AI systems become more sophisticated and capable, there is a risk of over-reliance and complacency by cybersecurity professionals and organizations. While AI can significantly enhance security measures, it should not be viewed as a replacement for human expertise and vigilance.
Cyberthreats are constantly evolving, and AI systems may fail to detect or respond effectively to novel attack vectors or edge cases that fall outside their training data. Overconfidence in AI capabilities could lead to a false sense of security and a failure to maintain a comprehensive, multi-layered approach to cybersecurity.
Skilled workforce and resource constraints
Implementing and maintaining AI-powered cybersecurity solutions requires a skilled and specialized workforce, as well as substantial computational resources and infrastructure. Not all organizations may have access to the necessary talent, expertise or financial resources to fully leverage the benefits of AI in cybersecurity.
This disparity can create a divide between well-resourced organizations and those with limited resources, potentially exacerbating existing cybersecurity vulnerabilities and widening the gap in overall security postures.
Explore AI’s role in cybersecurity with Maryville University
As the cybersecurity landscape continues to evolve, the role of AI in proactive risk mitigation and threat detection is more crucial. Maryville University’s online programs in Artificial intelligence and cybersecurity provide students with the knowledge and skills necessary to navigate this dynamic field. By combining innovative AI technologies with robust cybersecurity practices, individuals can stay ahead of emerging threats and contribute to a more secure digital future.
Digital threats are an escalating issue. Cybercrime is predicted to inflict $10.5 trillion in damages worldwide annually by 2025, according to a 2023 cybercrime report from eSentire. Though distinct, cybersecurity and computer forensics are inextricably linked in the battle against cyberthreats. These fields safeguard our digital assets, protect our personal information and secure vital systems.
With cyberthreats on the rise, individuals and organizations alike must arm themselves with the knowledge and skills necessary to protect against malicious attacks and mitigate potential damage.
What is cybersecurity?
Cybersecurity is the practice of implementing technical safeguards to secure the digital world, where devices and sensitive information interact, from malicious threats. It encompasses many disciplines, including network security, risk management and incident response, and adopts a proactive approach to anticipate and prevent potential cyberattacks before they occur. This involves implementing robust security controls to protect digital assets and maintain trust and reliability.
Careers in cybersecurity
The field of cybersecurity offers a diverse range of career opportunities for individuals with varying skill sets and interests. Some of the roles in this field include:
Security analyst: Monitors, analyzes and responds to security incidents. Also assesses and mitigates potential security risks within an organization.
Penetration tester/ethical hacker: Simulates cyberattacks to identify vulnerabilities in systems and networks, helping organizations strengthen their security posture.
Incident responder: Investigates and responds to security incidents, such as data breaches, malware infections and other cyberthreats, to minimize their impact and facilitate recovery efforts.
Security architect: Designs and implements secure network architectures, ensuring security is integrated into the overall system design from the ground up.
Security consultant: Provides expert advice and guidance to organizations on cybersecurity best practices, risk assessments and compliance with industry standards and regulations.
These roles, among others, contribute to the overall goal of ensuring the security and resilience of digital systems and sensitive data, making cybersecurity a crucial and rapidly growing field in today’s technology-driven world.
What is computer forensics?
Computer forensics, or digital forensics, investigates and analyzes digital data to uncover evidence related to cybercrimes or security breaches. This field is reactive — the primary goal is to identify the perpetrators involved and reconstruct the events.
The forensics process involves acquiring evidence while maintaining a proper chain of custody, analyzing the data and reporting findings. Investigators follow strict protocols to ensure evidence is admissible in court proceedings. Through their analysis, they aim to determine what happened and who was responsible and provide supporting evidence for legal cases or internal investigations into the incident.
Careers in computer forensics
Computer forensics offers various career opportunities for individuals with strong analytical and technical skills, as well as a keen understanding of legal and ethical principles. Some of the roles include:
Computer forensic investigator: Responsible for conducting forensic investigations, collecting and analyzing digital evidence and preparing detailed reports for legal or organizational purposes.
Incident response analyst: Plays a critical role in responding to security incidents, coordinating forensic investigations and collaborating with law enforcement agencies or internal security teams.
Forensic science technician: Specializes in analyzing specific types of digital evidence, such as mobile devices, network traffic or malware and providing expert testimony in legal proceedings.
Digital evidence examiner: Focuses on the acquisition, preservation and analysis of digital evidence from various sources, ensuring its admissibility in court.
Cyber forensics consultant: Provides expert guidance and advisory services to organizations on digital forensics best practices, incident response planning and legal compliance.
These roles, among others, contribute to the overall goal of uncovering digital evidence, reconstructing cyber incidents and supporting legal and organizational investigations, making computer forensics a critical component in the fight against cybercrime and data breaches.
Proactive vs. reactive: Understanding the fundamental approaches
Cybersecurity and computer forensics are complementary fields that play crucial roles in protecting against cyberthreats and investigating security incidents. While cybersecurity focuses on proactive defense measures, computer forensics specializes in the reactive investigation and analysis of digital evidence.
Whether safeguarding personal data or protecting sensitive corporate information, understanding the principles of cybersecurity and computer forensics empowers individuals to defend against cyberthreats and mitigate potential risks effectively. These disciplines require diverse tools and skills to combat cyberthreats and investigate incidents.
Skills required for cybersecurity
Cybersecurity professionals should possess a diverse skill set combining technical expertise and analytical acumen. Some essential skills for success in cybersecurity include:
Threat analysis and risk management: Assessing potential threats and vulnerabilities, prioritizing risks and developing strategies to mitigate them is fundamental to cybersecurity.
Understanding of network and system architectures: A deep comprehension of network protocols, system architectures and cloud computing is essential for effectively securing digital assets.
Incident response and mitigation strategies: Cybersecurity professionals must be adept at responding swiftly and decisively to security incidents, implementing containment measures and minimizing the impact of breaches.
Familiarity with security frameworks and industry best practices: Knowledge of security frameworks like NIST, ISO/IEC 27001 and CIS Controls, along with adherence to industry best practices, forms the foundation of robust cybersecurity practices.
Tools used in cybersecurity
Cybersecurity professionals rely on specialized tools to safeguard systems and networks from cyberthreats. From antivirus and anti-malware software that find and remove harmful software to advanced intrusion detection systems that quickly spot suspicious activity, each tool plays a crucial role in protecting our digital environment. Tools like vulnerability scanners and penetration testing software add important layers of security to the mix by pinpointing and addressing system weaknesses.
Skills required for computer forensics
Computer forensics experts possess a specialized skill set tailored to the investigation and analysis of digital evidence. Some key skills for success in computer forensics include:
Data analysis and interpretation: The ability to sift through vast amounts of digital data, identify relevant information and draw meaningful conclusions is essential in computer forensics.
Understanding of file systems and data structures: Proficiency in file systems such as NTFS, FAT and Ext4, as well as knowledge of data structures, enables computer forensics experts to navigate and extract evidence from digital storage devices.
Digital evidence handling and preservation techniques: Rigorous adherence to the chain of custody procedures, evidence handling protocols and preservation techniques ensures the integrity and admissibility of digital evidence in legal proceedings.
Legal knowledge and courtroom proceedings: A solid understanding of relevant laws, regulations and courtroom procedures is crucial for computer forensics experts who may be called upon to testify as expert witnesses.
Proficiency in forensic tools and software: Mastery of forensic analysis software such as EnCase, Forensic Toolkit (FTK) and Autopsy, as well as familiarity with data recovery and imaging tools, is essential for conducting thorough digital investigations.
Tools used in computer forensics
Computer forensics experts leverage specialized tools to collect, analyze and present digital evidence in legal proceedings.Forensic analysis software enables examiners to examine digital evidence, recover deleted files and generate forensic images of storage devices. Complementing this are data recovery and imaging tools, which retrieve deleted or corrupted data and create bit-by-bit copies (forensic images) of storage media for analysis without modifying the original data.
Network analyzers and packet sniffers are crucial in capturing and scrutinizing network traffic to reconstruct digital communications and pinpoint potential security breaches or unauthorized activities. These tools empower forensic investigators to uncover evidence critical to legal proceedings.
Fortify digital defenses with cybersecurity training
As the frequency and sophistication of cyberattacks continue to rise, organizations must prioritize cybersecurity and computer forensics to effectively mitigate risks, respond to incidents and gather evidence for legal proceedings. By understanding the differences and synergies between these two disciplines, organizations can develop a comprehensive security strategy encompassing prevention, detection and investigation.
If you are interested in pursuing a career in these dynamic fields, Maryville University’s online bachelor’s in cybersecurity and master’s in cybersecurity offer a comprehensive curriculum designed to equip you with the skills and knowledge necessary to excel in cybersecurity, computer forensics or related areas.
Digital operations have transformed with the rapid expansion of cloud computing. Offering unprecedented scalability, cost-efficiency and accessibility, cloud services are indispensable for individuals and businesses alike, from budding startups to multinational corporations optimizing their workflows.
The allure of cloud services — spanning Infrastructure as a Service (IaaS), Platform as a Service (PaaS) and Software as a Service (SaaS) — ushered in a significant shift in IT infrastructure strategies. However, this shift comes with its own set of challenges. More than 80% of breaches involved data stored in the cloud, according to a 2023 IBM report, highlighting the critical need for robust cybersecurity measures.
The shared responsibility model splits cloud security duties between the provider (securing infrastructure) and customer (securing data, apps and configurations). As organizations leverage third-party clouds, navigating this model’s complexities is paramount. Remaining vigilant against the evolving landscape of cyberthreats is essential to safeguarding organizational assets and ensuring operational continuity.
Understanding cloud security risks and threats
The security risks and threats facing cloud computing environments demand that organizations remain vigilant and take proactive steps to address them. Some of the most significant risks include:
Data breaches: Data breaches can result in the unauthorized access, disclosure or theft of sensitive information. They can be caused by misconfigured cloud services, insecure APIs or malicious insiders with privileged access.
Account hijacking: Account hijacking occurs when attackers gain unauthorized access to cloud accounts and resources. This can lead to data theft, service disruption and other malicious activities.
Distributed denial-of-service (DDoS) attacks: DDoS attacks overwhelm cloud services with traffic from multiple sources, potentially causing service outages and financial losses due to service disruptions.
Advanced persistent threats (APTs) and targeted malware: APTs are prolonged, multi-stage attacks using advanced, evolving techniques to gain persistent and undetected access, often with objectives like data theft or system sabotage.
These risks and threats can devastate organizations, resulting in financial losses, reputational damage, regulatory fines and loss of customer trust. Organizations must implement robust cloud security measures to mitigate these risks and protect their valuable data and systems.
Cloud security compliance and regulatory requirements
Compliance with relevant regulations and industry standards is crucial for organizations operating in the cloud. Failure to adhere to these guidelines can result in severe consequences, including substantial fines, legal penalties and reputational damage.
Key regulations governing data handling in the cloud include the General Data Protection Regulation (GDPR) for the EU and the Health Insurance Portability and Accountability Act (HIPAA) in the United States. The GDPR applies to any organization handling personal data of EU residents, regardless of its geographic location. Similarly, HIPAA sets national standards for protecting patient health information, requiring compliance from healthcare entities, providers and business associates, especially when handling electronic protected health information (ePHI) in cloud environments. Both regulations mandate stringent data protection measures, such as data encryption and access controls, to ensure privacy and security.
Additionally, organizations processing payment card data must adhere to the Payment Card Industry Data Security Standard (PCI DSS), ensuring secure handling regardless of the payment channel or environment, including cloud-based systems. Key requirements include maintaining a secure network, protecting cardholder data, implementing access control measures and regularly monitoring and testing networks. Frameworks, such as the National Institute of Standards and Technology (NIST) Cybersecurity Framework, complement these regulations by offering comprehensive strategies for enhancing overall security posture.
Cloud security best practices and strategies
Implementing a robust cloud security strategy is essential to mitigating risks and protecting valuable data and systems. Key best practices include:
Data encryption: Encrypting data both at rest and in transit using strong encryption algorithms and key management practices can help prevent unauthorized access and data breaches.
Strong access controls: Implementing robust identity and access management controls, such as multi-factor authentication, role-based access controls and regular access reviews, can help prevent account hijacking and unauthorized access.
Security monitoring and logging: Continuously monitoring cloud environments for potential threats and suspicious activities, coupled with comprehensive logging and auditing, can aid in timely detection and response to security incidents.
Incident response planning: Having a well-defined and regularly tested incident response plan can help organizations quickly contain and mitigate the impact of security incidents in cloud environments.
Leveraging security automation and orchestration tools can also enhance cloud security by streamlining processes, reducing human error and enabling faster response times to security events. These tools play a crucial role in managing the complexity and scale of cloud environments, where manual processes are often impractical.
Security automation: Scripts, workflows and pre-defined rules automate repetitive and time-consuming security tasks, such as configuration management, patch management and event monitoring. Automating these processes ensures consistent and reliable security measures are applied across an organization’s entire cloud infrastructure.
Security orchestration: This process involves the coordination and integration of multiple security tools and processes. It enables organizations to streamline their security operations by centralizing security tasks, such as threat detection, incident response and remediation actions.
Emerging technologies and their impact on cloud security
As cloud computing continues to evolve, emerging technologies such as artificial intelligence (AI), machine learning (ML), containerization and serverless computing are shaping the future of cloud security.
AI and ML can be leveraged to analyze vast amounts of data, identify potential threats and automate security processes, reducing the burden on human analysts and improving overall security posture. For example, AI-powered security solutions can detect abnormal behavior patterns, identify vulnerabilities and predict potential attacks, enabling organizations to take proactive measures to mitigate risks.
Containerization and serverless computing are modern cloud application management methods. Containerization packages applications into portable containers for consistent deployment, while serverless computing eliminates infrastructure management by automatically scaling code. Despite benefits in scalability and resource efficiency, both introduce new security concerns that organizations must address.
Additionally, as the Internet of Things (IoT) expands, securing connected devices and the data they generate in cloud environments will become increasingly important. Organizations must adopt IoT security best practices, including endpoint protection, gateway security, data encryption and security communication protocols to protect against unauthorized access and data breaches.
Secure the cloud with cybersecurity training
As the adoption of cloud computing continues to accelerate, ensuring robust cybersecurity measures is crucial for protecting valuable data and systems. A proactive and holistic approach, encompassing best practices, compliance with regulations and leveraging emerging technologies, is essential for organizations to secure their cloud environments effectively.
For professionals seeking to build expertise in cloud security and cybersecurity, Maryville University offers online bachelor’s in cybersecurity and master’s in cybersecurity degrees. These programs provide comprehensive training, equipping individuals with the knowledge and skills to navigate the complex landscape of cloud computing and cybersecurity.
An effective employee preboarding and onboarding program helps increase new hires’ job satisfaction, engagement, productivity, and retention.
Employee onboarding is a crucial part of the hiring process. The way a new hire is welcomed sets the stage for future performance, corporate integration, and job satisfaction. During the onboarding process, new hires learn about job responsibilities, corporate procedures, and administrative processes. Successful onboarding helps individuals smoothly transition into new roles and can limit a company’s exposure to potential employment claims.
A methodical onboarding program also helps managers and new hires stay on task. Using a checklist that includes key onboarding events like the first day meet and greet, paperwork completion dates, and a job training schedule helps ensure effective employee onboarding.
While onboarding may seem like a logical first employment step, a process called “preboarding” actually precedes the employee’s first day on the job.
Jump to ↓
What is employee preboarding?
Preboarding paves the way for the actual onboarding process and can begin months – or days – before an employee’s official start date. The preboarding process includes opportunities for employee meet-and-greets, information sharing discussions, and provides a chance for employees to complete preliminary paperwork. Engaging with new hires early on make them feel welcome and excited about their new roles. Preboarding involves tasks such as:
Conducting background checks — Background checks should be completed before an offer is extended. These important reviews allow employers to evaluate an individual’s credentials, minimize the risk of employee fraud or theft, minimize workplace violence, and limit litigation exposure.
Communicating with new employees — Weeks, or even months, can pass between the acceptance of a job offer and an employee’s actual start date. Keeping in touch with new hires during this time maintains the new hire’s feelings of engagement and excitement. Remember, other companies may still be courting the new hire. Don’t let them be the only ones in a future employee’s ear.
Connecting new hires with their future team members — Beginning a new position is intimidating. Employees who are introduced to their future co-workers feel more at ease when entering a new corporate environment.
Collecting the signed offer letter — Before an employee’s first day, have them review, approve, sign and return applicable employment agreements. These agreements can include their offer letter, employment agreement or contract, non-disclosure agreement (NDA), and arbitration agreement. There may be other relevant documents depending on the employee’s classification and job responsibilities.
Sending pre-employment paperwork — While companies can opt to save new hire paperwork requests for the employee onboarding process, there is no harm in getting some of the more mundane administrative tasks out of the way before employment officially begins. Employers can request state and tax forms like W-4 for federal income tax, W-4 for state income tax, Form I-99 for employment eligibility verification, direct deposit forms, distribute the employee handbook (including benefits information), and send company policies.
Talking to your current team — Bringing in a new employee can make current employees nervous. Explaining the new hire’s role and responsibilities goes a long way to ease current employees’ concerns. You don’t want your existing team to feel threatened by their new co-worker.
Sending an onboarding schedule — Effective onboarding can take days or months. Setting forth the schedule will help new hires plan accordingly.
If preboarding was effectively executed, new employees are excited and prepared on day one.
11 steps to set up an effective employee onboarding process
Once new hires are cleared for employment and offer letters are signed, the multistep onboarding process begins. Try to complete the following steps during the employee’s first weeks with your company:
Hand out a welcome packet — Welcome packets are a great way to greet new employees. Include items in the packet that reflect the company culture and show new hires they are appreciated. Mugs, calendars, pens, an organization chart, a phone directory, and a facility map are always appreciated. Also send an electronic version of the welcome letter contained in the packet.
Collect personal information — If paperwork was not collected during the preboarding process, each new hire’s social security number, home address, phone number, legal name, pronouns, date of birth, and emergency contacts need to be recorded.
Companies with 100 or more employees are required to submit an Equal Employment Opportunity report (EEO-1) which must offer new employees the opportunity to self-identify race, ethnicity, and gender. They must also provide a statement about the voluntary nature of this inquiry. Finally, advise that if an employee chooses not to self-identify, the employer can use employment records or visually identify the employee’s race, ethnicity, and gender.
The paperwork phase of the onboarding process is a good time to handout an employee questionnaire. These questionaries can ask for the new hire’s interests, favorite restaurants, or any other information that will help you select future prizes for work-related incentive programs. Completion of this questionnaire should be optional.
Introduce the new employee to their teammates — Social introductions and interactions help facilitate workplace integration. Consider a first day lunch with the new hire and their new teammates. An informal lunch is the ideal time for new hires to learn about office dynamics and company culture.
Encourage new employee participation — Elicit the new employee’s perspective during team meetings. Encourage new team members to share their thoughts by saying things like, “What do our new team members think? I bet they have a fresh take that hasn’t occurred to us.”
Use the buddy system — Direct co-worker involvement is encouraged by assigning a work buddy or mentor. Buddies or mentors can be formally or informally assigned, and the arrangement can run for a finite time or can simply run its own natural course. Mentors give new hires someone to turn to and provide insight into the company culture and team dynamics. These individuals can also share best practices with new additions. Mentor relationships are not static, but rather grow and change overtime. Having a go-to work buddy positively impacts employee satisfaction and retention.
Provide job related “tools” — Work related equipment should be distributed when the employee onboarding process begins. The IT department should configure and distribute the employee’s laptop and other applicable devices. Rules covering the company’s equipment policies should be explained and acknowledged in writing.
Federal law prohibits companies with 15 or more employees from engaging in discrimination stemming from an employee’s disability. The provision of alternative work tools may be required. It is important to review all legally required Americans with Disabilities Act (ADA) workplace accommodations.
If the company provides ergonomic seating options, office décor choices, etc., now is the time to ask new hires about their preferred office setup.
Distribute the employee handbook — Employees may hesitate to ask questions. Providing a well-organized handbook resource filled with useful information reduces the likelihood that mistakes will arise from lack of basic workplace knowledge.
An annual review of the employee handbook will ensure all policies are current and lawful. Beyond this annual review, employers must update handbooks when a company policy or procedure changes or relevant state or federal laws are enacted. Revised handbooks should indicate that they supersede any prior versions.
Provide the company’s social media policy — Corporate social media policies can be included in the employee handbook or can be stand-alone policies. Social media policies should set forth whether social media can be accessed on company devices, explain that social media activity on company devices is not private, and delineate that misuse can place the company and individual employees in legal peril.
If the use of social media is permitted on company devices, avoid imposing unnecessary, impractical, or intrusive restrictions on employee use. Overly draconian social media policies can affect employee morale and invite noncompliance.
Review benefits information — Employee handbooks should contain a section covering employee benefits such as health insurance coverage and 401(k) retirement plans. New employees must be shown how to log into the company’s benefits portal.
Set forth performance metrics — Informing new hires of measurable targets and timelines helps them learn how success is defined in the workplace. Telling employees how and when performance will be evaluated, enables them to identify the primary focus of their new positions. New hires should also be told the best ways to provide 360 feedback.
Begin training sessions — Training falls into three categories: job specific, corporate, and legally required. Job-specific training may be completed during the onboarding process, but corporate and legally required training will continue throughout the new hire’s employ. Delineating the company’s continuing training program demonstrates the company’s commitment to its employees.
For a detailed employee onboarding checklist with information on W-4 forms, wage theft protection act notices, I-9 compliance, and more, please consult the Practical Law resources Employee Onboarding Checklist.
The employee handbook — A key onboarding tool
Corporate handbooks are a new hire’s lifeline. It is impossible to remember all the information shared during the onboarding process. These handbooks are invaluable, information-packed assets and must be kept current. Four things to include:
Employment — This section should include specifics such as detailed job description, benefits, workplace expectations, and potential consequences for failure to comply with the employer’s policies and procedures.
Federal, state, local, and company-specific policies — Policies governing time away from work, employee leave, holidays, vacation days, sick days, bereavement leave, family and medical leave (Family and Medical Leave Act), pregnancy and paternal leave, military service leave and jury duty leave should be included.
Salary structure — This information will vary based on each employee’s position and level within the company. Include relevant details such as hourly rate or base salary amount, commission, and bonus structure.
A training schedule — Training not only covers job-specific topics, but also corporate policies and state and federal laws. The inclusion of legally required policies in a corporate handbook demonstrates a commitment to comply with applicable laws to encourage resolution of problems before they become legal claims.
Don’t forget about the softer side of the onboarding experience
There are no rules governing the new employee integration process, and there is no way to measure what is going through a new hire’s mind. That said, we do know employees who feel valued and comfortable tend to job hop less frequently. Team lunches, mentoring programs, open-door policies, team building activities, coffee breaks, and regular check-ins help employees feel connected to their teammates and increase employee retention.
How long does onboarding last?
The onboarding process does not last for a specific time, though – depending on the company, complexity of the role, and industry – it can last between three to six months, and even extend up to the first 12 months of employment.
During an employee’s first year of employment, managers should ask the following questions during weekly check-ins:
Have you have hit any roadblocks?
What type of training would be helpful?
Are you getting along with your co-workers?
Do you understand your role within the company?
Employee onboarding also applies to seasoned employees. Continuously assessing employee progress allows employers to tackle small issues before they become major issues. The support provided by these sessions help ensure employee satisfaction. Creating an open dialogue during these meetings will enhance employee comfort and help managers learn about their team members.
Ask for onboarding process feedback
Recent hires fresh off the onboarding process are the best people to ask for feedback. Find out what they liked about the process, ask if there were any gaps, find out if certain steps should be eliminated, and ask which topics should be added. This feedback can be collected through informal conversations or confidential surveys.
Concerns regarding the onboarding process should not be dismissed. It is important to demonstrate how much the company values the employee’s feedback. Chances are other recent hires feel similarly and are not comfortable voicing their concerns.
What are signs that employee onboarding was not successful?
If new hires seem confused, are not hitting their targets, or are unmotivated it is time to revisit the onboarding process. Employee onboarding is not a one size fits all tool and managers must recognize the signs of ineffective or incomplete onboarding. The process need not start over entirely. Rather, jump in where things appear amiss. For instance, if the employee is consistently missing sales targets, maybe the training method you used did not match this employee’s learning type. Ask the employee “What type of training would be helpful?”
The need to reboard employees should not be viewed as a failure of the onboarding process. Effective onboarding is not an exact science. When managers identify the processes’ shortcomings, they can improve its effectiveness for the next round of new hires.
Final thoughts
Hiring, onboarding, training, and retaining employees is expensive, so utilizing processes that increase employee engagement, productivity, and retention is crucial. Satisfied employees are typically the best employees. A subpar employee onboarding experience can taint the employee’s opinion of your company right from the start. First impressions matter.
Use the Practical Law Employee Hiring and Orientation Toolkit to access recruiting, interviewing, hiring, and employee onboarding resources. Try it for free today!
Overview of legal-focused generative AI tools that assist law firms, in-house teams, court systems, and legal departments for essential tasks
Artificial intelligence (AI) is rapidly becoming an essential tool for many professionals across various industry sectors, and its impact on law and the legal profession is no different.
By automating numerous repetitive, mundane tasks and replacing outdated ways of working, legal teams can experience the power of generative AI (GenAI) tools that feel like reliable AI legal assistants.
Jump to ↓
AI use cases
Data synthesis and analysis
Data and contract analysis
Legal research
Legal drafting
M&A due diligence
Knowledge management
Onboarding and learning
Plain language prompting
AI is a simulation of human intelligence by a machine, and this opens up a whole future of possibilities. Generative AI can assist with document processing and classification for a wide range of matters, including due diligence, document and contract review, compliance, contract management, knowledge management and deal analysis.
By automating these tasks using intelligent technology, significant workflow benefits can be achieved, particularly with improved efficiency and productivity as well as greater accuracy.
The use of AI at law firms has transitioned from a mere desire to an essential requirement. It is changing the way we do business, much the same way as email did in the 1990s. As digital transformation continues to advance, AI will become ubiquitous and an indispensable assistant to practically every attorney and legal professional, freeing up time for tasks that add greater value such as thinking and advising.
Legal generative AI is supposed to augment what a lawyer does. It’s not going to do legal reasoning, not going to door case strategy. What it’s supposed to do is do repeatable rote tasks much more quickly and efficiently.
Zach Warren Manager, Technology and Innovation, Thomson Reuters Institute
Search and summarize
Creating, reviewing and sending various documents forms a large part of an attorney’s daily tasks that can be drastically improved with artificial intelligence. GenAI can interpret and summarize critical data in dense legal documents, including contracts, court opinions, and transcripts, faster than humanly possible.
How is it done? Search and pinpoint key information that could be scattered across thousands of documents then easily share information across your organization.
Data and contract analysis
With the power of AI in your legal tech tools, you can sort files rapidly and seamlessly without needing to manually examine them. The range of assistance offered by legal-focused generative AI improves the legal firm’s or department’s output by facilitating the legal professional’s ability to apply their higher-level expertise to the work at hand.
Accelerated legal research
GenAI provides a jumpstart on legal research by reducing the time legal professionals must spend sifting through legal documents and summarizing content. These tools can produce in moments an informative version of research complete with citations for case law that would have previously taken hours or days.
For any of the tasks that lawyers do on a regular basis or that administrative professionals supporting the legal industry do on a regular basis, this technology allows them to do those things faster and to create a starting point much earlier in the process.
Zena Applebaum Global VP, Product Marketing for Research Products for Thomson Reuters
Lawyers can then apply their expertise to refining the results to ensure that the research output is high quality, thorough, and even more accurate.
Legal drafting
Need to find the best starting points with trusted contract language and legal document templates? According to Thomson Reuters research, lawyers can spend up to 56% of their time drafting documents, they still take more than 15 minutes just to find a good starting point for their draft.
Now you can transform how you draft documents with a secure, GenAI-enabled solution integrated directly into Microsoft Word that leverages Practical Law and your own repository. Legal-focused GenAI can draft clauses from scratch, modify existing language of a contract, summarize lengthy clauses, and answer questions about their terms.
Streamlined M&A due diligence
M&A due diligence is a tedious task that limits your time and ability to innovate and creatively problem-solve.
Using AI tools for analysis and review of documents saves time and allows you to focus on more valuable pursuits, which facilitates enhanced creativity and allows you to focus exclusively on the tasks that only a person can handle – the job you were trained to do and the job you are passionate about.
Improved knowledge management
GenAI can help legal teams stay organized and share information via cross-functional tools. Better and faster methods of saving, indexing, identifying, and disseminating lawyers’ prior work and collective expertise helps legal firms and departments solve legal and business problems more effectively.
Enhanced onboarding and learning
Demonstrate the value of your legal team by delivering better advice faster than ever before. Legal-focused GenAI tools help users get up to speed quickly without extensive training, whether they are new to a firm or gaining knowledge about an unfamiliar area of law.
These tools also help users learn new skills in a hands-on way as they work, reducing the need for as many formalized skill-development interventions, saving time and money.
Plain-language prompting to navigate complexity
Those unfamiliar with a given area of law may struggle to know where to start or which language is most applicable in searching for resources.
Generative AI tools that can be prompted using plain-language queries allow users to access faster answers to complicated legal questions. Since NLP (Natural Language Processing) is used to understand questions and generate meaningful human language, legal professionals can rapidly organize information to help develop successful arguments.
Ethical implications
Using AI in legal work raises significant ethical concerns. Attorneys must ensure they fully understand the technology they use, as required by their duty to provide competent representation, which includes staying updated on technological advancements and understanding the benefits and risks of AI. This is crucial because failing to verify the accuracy of AI-generated content could lead to ethical violations.
Trust and accuracy
Repetitive and manual processes and are typically prone to human error and can introduce an unnecessary element of risk. AI models developed and backed by expert human oversight give you a competitive edge by improving accuracy and thus reducing risk.
Additionally, a professional tool licensed to a particular institution or firm provides a far more secure work ecosystem than a public-facing tool with few or no data controls. While legal professionals must always use caution regarding what data they use with AI tools, they can input a range of proprietary data with far less risk with professional-grade GenAI for legal professionals.
Whereas many legal AI tools rely on the publicly available data, legal-specific GenAI tools are trained on non-open legal data specific to the legal domain. Legal organizations should perform due diligence to find out which data sets are used to train the LLM (large language models) used for work-product. By understanding the quality and scope of the training data, they can be confident that their output will be more trustworthy and accurate than other LLMs.
