The judge’s ruling essentially functions as a reprimand of the way many incident response firms now interact with their clients, according to Edward McNicholas, co-leader of the privacy and cybersecurity practice at Ropes & Gray. If a security company consistently is selling a client other services while working on retainer, and the differences aren’t clear in contractual language, McNicholas said, there is a risk of losing legal protection in the event of a data breach.
“This is a fascinating decision in part because it pokes at the business model in that it tees off on the idea that they had a pre-existing statement of work,” he said. “This judge just said, ‘This business relationship has grown far beyond what we normally see in this context.’”
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