Can a Business Be Held Liable for a Cyberattack? Here's What You Need to Know

You didn’t plan for this. You’ve got a business to run, clients to serve, employees to support, systems to keep humming. But then something breaks through your digital walls. A hacker. A data breach. A mess.

And now, you're wondering: can your business actually be sued for not preventing the attack? In New York? Yep, it’s possible. And if you're not ready, it can get expensive, fast.

That’s the part nobody talks about. You’re not just dealing with stolen data or frozen systems. You’re dealing with trust. With contracts. With legal exposure that hits when you least expect it. And when it does? The courts aren’t just asking what went wrong. They're asking what you did before it went wrong.

Our commercial litigation attorneys at Horn Wright, LLP, help business owners across New York get answers, stay calm, and take action. Whether you're picking up the pieces or looking to prevent the worst, we’ve got your back.

How Can You Get Sued After a Cyberattack? These Are the Legal Angles You Need to Know

Here’s the tough truth: a cyberattack doesn’t make you the bad guy, but it can put you in the legal hot seat. Customers, partners, or vendors might claim you didn’t do enough to stop it. And when they do, they’re usually coming at you with one of these claims:

Negligence

This one’s big. It means someone’s saying you had a duty to protect their data and dropped the ball. Maybe your software was outdated. Maybe no one patched known vulnerabilities. Or maybe you just didn’t have the right protections in place when it counted.

If a court agrees that your setup didn’t meet the mark, you could be on the hook.

Breach of Contract

Remember all those service agreements and privacy policies you’ve posted or signed? 

They matter. If you said you’d protect someone’s information and didn’t? That could be a breach. It doesn’t take much - one missed security promise and boom: you’re facing breach of contract claims.

Consumer Protection Violations

New York’s General Business Law Section 349 says you can’t mislead consumers, even by accident. 

If you promised “secure checkout” or “bank-level encryption” and your defenses didn’t match the hype, you could face claims under this law. Intent doesn’t matter. Impact does.

And Then There’s the Trust Factor

Some people may come after you with more complex claims, like fiduciary duties or bailment laws, especially if you're in a high-trust business like finance, healthcare, or legal services. If someone trusted you with sensitive info and it got leaked, they’ll argue you should’ve done more.

Bottom line? These legal theories all come back to one word: responsibility. If it looks like you didn’t take yours seriously, the legal consequences can snowball.

How Do Courts Decide If You Did Enough to Protect Data?

Let’s clear this up. No one expects you to be a cybersecurity genius. But courts do expect you to try.

They look at whether your efforts were reasonable. Not flawless. Not foolproof. Just solid, smart, and based on what any responsible business in your shoes should’ve done.

Here’s what matters:

• The size of your business.  Running a boutique firm in Brooklyn? You’re not expected to have Fort Knox security. But you are expected to have the basics: password protocols, software updates, secure Wi-Fi. It’s about matching effort to risk.
• Your industry’s standards. Are others in your space using two-factor authentication? Encrypting customer data? If so, and you’re not, that’s a red flag. Courts lean on guidance from places like National Institute of Standards and Technology and the Federal Trade Commission to figure out what counts as “reasonable.”
• Past breaches. If this isn’t your first breach and you didn’t change anything after the last one? That’s a problem. Courts notice repeat patterns and they don’t go easy on companies that fail to learn from mistakes.
• How well your team was trained. Most breaches start with a single click. If your staff wasn’t trained to spot phishing scams or secure their logins, that’s on you.
• Your response game plan. Did you have a plan when things went sideways or were you scrambling? Courts want to see a documented response strategy, not chaos.

And don’t forget: under New York’s SHIELD Act, you’re legally required to put “reasonable safeguards” in place if you handle personal data. Skip that, and you could end up needing serious commercial lawsuit representation.

Breach Already Happened? Here’s What You Can Do Right Now

You’re not a cybersecurity expert. And when a breach hits, it’s easy to feel like the damage is already done. But don’t give up. What you do next really matters.

1. Notify people fast

New York’s Data Breach Notification Law says you have to alert affected individuals quickly. Don’t wait. The longer you delay, the more legal trouble you could face.

• Fines can hit $250,000 or more.
• Delays damage your brand and your customer relationships.
• Regulators will ask why you waited—so have an answer ready.

2. Keep your receipts (and your logs)

 Everything you do from this point forward? Track it. You’ll want:

• Proof of security updates and patches
• Logs from audits or IT scans
• Emails with your breach response team
• Notes from internal meetings or legal reviews

Courts don’t rely on guesswork. They want hard evidence that you took the breach seriously.

3. Bring in the pros

Cyberattacks are a legal crisis, not just an IT headache.

• Call in a forensic firm to find the breach, fix the hole, and help with reporting.
• Hire experienced New York attorneys to protect privileged communications and steer you through the regulatory mess.

And if things head toward litigation? Make sure you’ve got a corporate litigation firm that’s done this before.

4. Double-check your vendor agreements

If the breach started with a third-party system, like a payroll provider or IT contractor, look at your contracts. Did they promise to follow security protocols? Are they required to notify you right away? Can you recover costs from them? Know where you stand.

5. Review your insurance coverage

Cyber insurance isn’t a luxury anymore, it’s a lifeline. But not all policies are equal.

• Make sure you’ve got coverage for legal fees, breach response, ransomware events, and business interruptions.
• If your operations involve financial data, medical records, or ecommerce, your coverage needs to match that level of risk.

If you’ve got partners in the business, align on how you’re handling everything.

Tensions can rise fast, and disagreements over money or responsibility could lead to internal disputes. In that case, a partnership dispute attorney can help keep things focused and professional.

Let’s Protect Your Business, Now and Moving Forward

Cyberattacks are stressful. The legal mess afterward? Even worse. But you don’t have to face it unprepared.

Our commercial litigation lawyers at Horn Wright, LLP, help New York businesses respond strategically, avoid missteps, and protect what they’ve built. 

Whether you’re managing a breach right now or trying to stay ahead of future risks, we will walk you through the process step by step - with straight answers, solid strategy, and zero judgment.

Protect your business, your reputation, and your peace of mind. 

You’ve got enough on your plate. Let one of the best law firms in America help you handle the legal side. Contact our office today to schedule your complimentary case evaluation.