8 cybersecurity audit best practices for law firms: a step-by-step guide

Has your law practice ever felt something was "off" about a transaction?

You're not alone.

Consider the case of a real estate attorney who spotted red flags when a layered LLC structure attempted to purchase vacant land. Their additional verification revealed a sophisticated impersonation scheme that nearly resulted in six-figure wire fraud.

It’s another example of why cybersecurity is critical for all law firms. 

With the FBI's Internet Crime Report 2023 documenting over 30,000 business email compromise and real estate fraud complaints totaling billions in losses, law firms across all practice areas must strengthen their security measures.

That's why it's so important to run a cybersecurity audit and prevent fraud in any form.

In this article, you'll learn steps for conducting a cybersecurity audit, specifically for legal practices.

What is a cybersecurity audit for law firms?

A cybersecurity audit for your law firm is an assessment of your information systems, security controls, and policies.

The goal is to identify vulnerabilities and create mitigation strategies.

Additionally, you aim to establish compliance with industry standards, state bar regulations, and ethical obligations related to client funds, confidentiality, and cybersecurity. 

Your law cybersecurity level assessment should focus on three critical areas:

1. Data cyber security: Your client files, communications, financial records.
2. Infrastructure security: Your networks, devices, access points.
3. Process security: Your workflows, verification procedures, staff protocols.

The benefits of conducting a cybersecurity audit include:

• Protecting client confidentiality: Preventing sensitive data from being stolen or exposed.
• Maintaining trust: Avoiding legal repercussions to your firm's reputation.
• Increasing productivity: Ensuring your IT infrastructure is secure and properly monitored.
• Limiting financial liability: Reducing the risk of costly data breaches and fraud.
• Achieving regulatory compliance: Meeting ethical obligations and state bar requirements.
• Strengthening competitive advantage: Demonstrating to clients that their personally identifiable information is protected.
• Improving incident response: Enabling faster detection and mitigation of security breaches.
• Enhancing staff awareness: Building a security-conscious culture throughout your practice.

But unlike generic businesses, your law firm faces unique vulnerabilities compared to other industries:

• Client trust account protection: Ensuring funds are properly managed and securely transferred.
• Third-party risk management: Working with title companies, lenders, and clients over potentially vulnerable channels like email.
• Attorney-client privilege: Keeping confidential legal documents secure from unauthorized access.

How law firms can ensure cybersecurity compliance

Before implementing cybersecurity practices, understand the specific regulatory framework that governs data security for you in the United States.

ABA model rules of professional conduct

• Rule 1.6(c) requires lawyers to "make reasonable efforts to prevent inadvertent or unauthorized disclosure of client information."
• Formal Opinion 477R (2017) clarifies that attorneys must assess security measures when communicating client information.
• Formal Opinion 483 (2018) outlines obligations after data breaches, including client notification requirements.

State bar ethics opinions

• Most state bars have issued specific technology competence requirements.
• California, New York, and Florida have particularly rigorous guidance on encryption and client data protection.

State data breach notification laws

• All 50 states now have data breach notification laws with varying requirements.
• Many laws stipulate that notifications must be made "in the most expedient time possible and without unreasonable delay." Some states define specific timeframes; for example, Colorado requires notification no later than 30 days after determining that a security breach occurred. 

Industry-specific regulations

• HIPAA compliance for law firms handling protected health information.
• GDPR implications for firms with international clients or EU data.

Now, let’s dive into 8 best practices for your law practice to follow when it comes to cybersecurity. 

8 cybersecurity best practices for law companies

1. Conduct a cybersecurity risk assessment

Your law firm needs a workflow-specific risk assessment for all practice areas.

Generic assessments often miss the vulnerabilities in legal processes like litigation document exchanges, client communications, and financial transactions.

Here's how to perform a cybersecurity risk assessment tailored to your practice:

• Identify high-risk processes: Map out all transaction workflows, client data storage, and remote access procedures. For example, real estate closings require specific verification steps that should be standardized and secured.
• Evaluate third-party risks: Assess the security practices of vendors, cloud providers, and other partners you regularly work with.
• Test for social engineering vulnerabilities: Evaluate your firm's susceptibility to phishing, impersonation fraud, and other manipulation tactics.

Imagine a law firm discovering that their client fund transfer process had a critical gap. They verified wire instructions using the phone number provided in the same email containing the instructions. 

If a fraudster had intercepted the email and replaced both the instructions and phone number, the verification would have seemed legitimate while funds were misdirected.

Here's what a secure verification workflow could look like:

• Title Production Software (TPS). Your workflow starts in your title software where you manage transactions and store initial wire instructions
• Verification platform. Wire instructions should get verified through a fraud prevention tool
• Banking platform. Once verification is complete, you can execute the wire transfer

This workflow shows essential steps to verify wire instructions before transferring funds. 

When receiving instructions, your verification platform helps determine if they're safe or need review. 

Discrepancies trigger information requests before proceeding. Consistent adherence to this process by all team members creates security and an audit trail for every transaction.

Where a cybersecurity audit would help:

• Risk assessment would categorize payment change requests as "high risk."
• Would establish verification protocols separate from email communication.
• Would implement risk scoring for transaction requests based on urgency and amount.

2. Secure document storage and access controls

Your confidential case files, contracts, and client records need protection due to the sensitive data they contain.

Set standards for your documents to stay secure:

• Use encrypted cloud-based storage: Replace local hard drives with secure, encrypted cloud storage platforms that meet legal industry standards for data protection.‍
• Apply caution with email: Never share sensitive documents via unsecured email. Business email compromise (BEC) attacks specifically target legal professionals handling high-value transactions.
• ‍Limit access based on roles: Create specific access levels for attorneys, paralegals, and administrative staff based on their need to access confidential data.‍
• Enable audit trails: Implement systems that track document modifications and access, providing a record of who accessed what and when.

For example, take  a law practice where all staff access all documents on shared drives without restrictions.

If the network experiences a ransomware attack following malware infiltration, the encryption would spread rapidly to all accessible document storage.

As a result, all closing documents and financial records would become inaccessible, delaying multiple closings and damaging client trust.

Where a cybersecurity audit would help:

• Would identify unsecured document storage as a critical vulnerability.
• Would implement role-based access controls limiting exposure.
• Would establish secure, isolated backup systems for quick recovery.

3. Protect attorney-client communications

Unencrypted emails pose a cybersecurity risk for your law firm, potentially exposing privileged communications to unauthorized access.

Implement these best practices for secure communication:

• Use encrypted email services: Deploy secure messaging platforms designed for sensitive legal communications.
• Require multi-factor authentication (MFA): Add this additional security layer for accessing client communications and secure portals.
• Never accept financial instruction changes via email: Create a firm policy that any updates to payment instructions must be verified through wire fraud prevention tool—not email.

Imagine that a paralegal in a law practice clicked a malicious link in a convincing email and the attacker got access to the email account for weeks before the real estate closing. 

Fraudsters learned transaction patterns and timing and, close to the closing date, sent fraudulent wire instructions from the attorney's actual email account.

Where cybersecurity audit would help:

• Would identify unencrypted email as inappropriate for financial instructions.
• Would implement a solution for a secure way for attorneys to send, collect and confirm wiring instructions.
• Would establish email monitoring for unauthorized access and suspicious rules.

4. Implement strong identity verification measures

To prevent impersonation fraud, your law practice must establish the identity of all key parties in transactions. 

This is especially critical in real estate, mergers and acquisitions, and trust administration where significant assets are involved.

Strengthen your identity verification by:

• Using biometric verification: Deploy device-based authentication for all transactions.
• Adopting secure third-party verification services: Use digital identity verification tools like CertifID Match that validate identity through multiple security checkpoints, including:
  
  • Device analysis for fraud indicators.
  • Knowledge-based authentication questions.
  • Biometric verification.
  • Cross-referencing with known fraud databases.

Where cybersecurity audit would help:

• Would identify high-risk transactions requiring enhanced identity verification.
• Would establish standardized verification protocols across all practice areas.
• Would recommend solutions like biometric authentication when needed.

5. Secure financial transactions and client trust accounts

Law firms managing client funds, escrow accounts, and financial transactions are prime targets for fraud, particularly money fraud during high-value transactions.

Implement these best practices for securing financial transactions:

• Regularly reconcile client trust accounts: Set up alerts for unusual transactions that might indicate fraud.
• Implement secure digital payments: Use platforms specifically designed for legal financial transactions.
• Deploy data encryption: Ensure that all financial data is encrypted so it's unintelligible without proper decryption keys.
• Consider cyber insurance: While it doesn't prevent attacks, specialized cyber insurance can help your firm recover after a data breach.

To highlight this: a law firm was handling the sale of a vacant land parcel worth $850,000. The seller claimed to be an LLC based in Nevada with managing members who couldn't attend closing in person.

The firm accepted standard documentation without additional verification steps, assuming the entity paperwork was sufficient proof of legitimacy.

If sophisticated fraudsters had created the LLC specifically for this transaction using stolen identities and forged documents, the firm would have unknowingly facilitated a fraudulent sale of property the "seller" never owned.

Where cybersecurity audit would help:

• Would establish enhanced verification protocols for a transaction like vacant land sales.
• Would implement digital identity verification tools beyond standard documentation review.
• Would flag suspicious patterns like recently-created business entities or unusual access locations.

6. Develop an incident response plan

Your law firm needs a clear plan for responding to cyberattacks, data breaches, and wire fraud attempts.

Key components of your incident response plan should include:

• A fraud response team: Clearly define roles and responsibilities for handling security incidents.
• Steps for freezing transactions: Create procedures for immediately freezing fraudulent transactions and notifying affected clients.
• Recovery services contact information: Maintain relationships with fraud recovery specialists who can assist in recovering misdirected funds.

An example: A law practice experienced a wire fraud attempt but had no established protocol for responding to the crisis.

They discovered the fraud after funds had been sent but wasted critical hours determining who to contact and what steps to take.

If they had developed an incident response plan in advance, they could have initiated recovery efforts within minutes rather than hours. This would have dramatically increased the chance of fraud recovery.

Where cybersecurity audit would help:

• Would establish clear, documented response procedures.
• Would identify and maintain emergency contacts at financial institutions.
• Would create a response team with assigned roles and authorities.

7. Strengthen employee training and security awareness

Your paralegals, legal assistants, and administrative staff are the most targeted employees in your law firm. Why? Because they often handle financial transactions and client communications.

For your law practice, focus your security training on:

• Conducting regular phishing simulations: Train your employees to recognize and report scam attempts.
• Requiring annual cybersecurity training: Focus specifically on fraud risks relevant to your practice areas.
• Encouraging a culture of security: Create an environment where staff feel comfortable questioning unusual requests or raising security concerns.

Imagine a law practice where staff received minimal security training and operated on "common sense" for fraud prevention.

They assumed experienced legal professionals would naturally recognize scam attempts without specific education.

If a sophisticated phishing email arrived impersonating a managing partner and requesting urgent wire changes, untrained staff might comply without question.

As a result, client funds totaling hundreds of thousands of dollars could be irretrievably transferred to fraudsters, often converted into cryptocurrencies within minutes of the transaction.

This in turn would leave the firm with liability exposure, damaged client relationships, and potential ethics violations.

Where cybersecurity audit would help:

• Would identify training gaps among support staff.
• Would establish verification protocols for all requests.
• Would implement regular simulations to reinforce security awareness.

8. Set frequency for your law practice cybersecurity audits

Cybersecurity threats evolve rapidly—your law firm must regularly review and improve security measures. 

What started as basic malware and obvious phishing emails has evolved into advanced social engineering, AI-generated content, and complex exploits.

Just watch how easy it would be to mimic somebody’s voice with AI.

That’s why you need to stay one step ahead of fraudsters. To make it happen, structure your cybersecurity audits with:

• Quarterly reviews: Evaluate your IT infrastructure and security protocols at least four times per year.
• Annual penetration testing: Focus specifically on legal workflow vulnerabilities in your practice.
• Real-time monitoring: Implement systems to flag high-risk transactions and unusual data access patterns.
• Per-transaction verification: Use secure tools for each transaction that happens in your practice to minimize risk exposure.
• Regular data security audits: Conduct these before attacks happen, as preventative measures rather than reactive responses.

If your law practice implemented security measures but never revisited them as threats evolved, that leaves you open to new risks.

Your initial security setup would essentially become ineffective without regular testing or updates. 

If new vulnerabilities emerged in their client portal software after implementation, they would remain undetected until exploited by the attackers.

Where cybersecurity audit would help:

• Would establish a regular security review schedule.
• Would test systems against newly emerging threats.
• Would identify vulnerabilities before they can be exploited.

Additional best practices for comprehensive law practice  protection

• Vet and monitor third-party vendors: Ensure your partners, including title companies, lenders, and software providers follow strict security protocols.
• Restrict access to sensitive data: Use role-based access control (RBAC) to limit access to legal and financial documents.
• Enable geo-restrictions for logins: Block access from unauthorized countries or regions to prevent foreign cyberattacks.
• Use password managers: Require strong passwords and store them securely with a firm-wide password manager.
• Implement zero-trust security framework: Assume no system or user is automatically trusted, requiring verification at every access point.

Cybersecurity audit law firm best practices: final checklist

To recap, implementing these cybersecurity audit best practices will significantly reduce your law firm's vulnerability to fraud:

1. Conduct thorough risk assessments specific to your legal workflows
2. Secure document storage with role-based access controls
3. Protect attorney-client communications through encryption
4. Implement strong identity verification for all transactions
5. Secure financial transfers with dedicated verification tools
6. Develop a clear incident response plan for breaches
7. Strengthen employee security awareness through training
8. Schedule regular security audits to stay ahead of evolving threats

By taking these proactive steps, your law firm can protect client funds, maintain confidentiality, and preserve the trust that forms the foundation of your practice. 

The investment in security today prevents potentially devastating losses tomorrow.

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