Cyber incidents don’t just threaten your systems, they can now land your organization in court. As regulatory expectations rise and privacy laws expand, litigation has become one of the costliest outcomes of a cyber event.
Case Study
An M3 client had a ransomware attack and they elected to not pay the ransom. However, the threat actor accessed personally identifiable information which necessitated notification letters going out to the affected individuals. While the claim is still ongoing, the costs are expected to exceed $5,000,000 due to the multiple class action lawsuits that were filed after the notification letters were delivered.
Litigation Landscape.
Data Breach class actions have become one of the biggest cost drivers in cyber claims. Legal fees and settlements can easily reach seven figures, sometimes exhausting policy limits.
What’s changed? It doesn’t take a massive breach to trigger litigation anymore. In the past, a “small” class might have meant 50,000 affected individuals. Today, lawsuits are being filed when only a few hundred are impacted. In fact, once an organization sends out notifications that personal identifiable information may have been exposed, class action filings are almost expected.
Website tracking litigation is another emerging trend, lawsuits that claim online tracking tools violate users’ privacy. These cases can be costly, with some settling quickly while others lead to significant legal fees and reputational damage. Many organizations use tracking and analytical technologies to understand how users interact with their websites. But without clear consent, those same tools can create unexpected legal exposure.
Additional Resource
Have you ever wondered why every website seems to have a cookie consent banner these days? They’re not just a courtesy, they’re a key risk management step. If your organization uses website tracking technology, make sure those tools don’t activate until visitors opt in.
Managing Risk.
Defending against cyber litigation often comes down to preparation and informed choices. When it comes to website tracking exposure, organizations have several ways to manage risk, each balancing marketing insight with privacy compliance.
The most conservative approach is to avoid using tracking and analytical technologies altogether. For businesses that rely on these tools, a cookie consent banner that requires users to opt in before any tracking occurs offers strong protection. Even allowing users to opt out can demonstrate a good-faith effort toward transparency and compliance, though it carries more risk. Regardless of approach, policyholders should review their insurance coverage to understand how their policy would respond to website tracking claims, as coverage terms can vary significantly between carriers.
For data breach class actions, the best defense begins long before an incident occurs. Maintaining an up-to-date incident response plan is essential, it not only minimizes the amount of data exposed but also demonstrates due diligence if a lawsuit follows. Many organizations are also reevaluating their cyber insurance limits as litigation costs continue to rise. Even smaller breaches now have the potential to generate expensive claims, and higher limits can provide crucial protection against escalating legal expenses. Together, these proactive measures strengthen both your technical response and your financial resilience in the face of evolving cyber threats.
Yes/And: Our Take
The cost of cyber incidents is shifting from ransom to litigation. The increased threat heightens the importance of having a fully developed preparedness and response plan and a strong cyber insurance program.
Yes, litigation is becoming more common, and with the right mix of preparation, policy alignment, and proactive review, your organization can stay protected from the next wave of cyber risk.
Connect with your M3 Client Executive to discuss your cyber and risk management strategy to stay prepared for what’s next.
