Why Encryption Matters in New York Cybersecurity Lawsuits

Cybersecurity breaches are more than IT problems. They’re legal ones. And in a city like New York, where data flows nonstop across industries, companies are under intense pressure to safeguard what they collect. 

That’s why encryption has become such a powerful legal tool. When properly implemented, it doesn’t just protect your data. It can help protect your business from liability, reputational harm, and regulatory penalties.

Whether you're running a startup in Brooklyn, a financial firm near Wall Street, or an e-commerce business out of Queens, how you manage encryption can directly impact your legal standing if a breach occurs. 

Our team of experienced commercial litigation attorneys at Horn Wright, LLP, understands both the legal and technical sides of cybersecurity litigation and we’re here to help you stay ahead of risk.

Encryption Can Save You or Sink You After a Data Breach

When a breach occurs, one of the first questions regulators, attorneys, and courts ask is this: was the compromised data encrypted?

Under the SHIELD Act, New York businesses are required to implement “reasonable” safeguards to protect private information. 

Encryption is one of the clearest ways to demonstrate that your organization took that obligation seriously. If it’s missing or poorly implemented, legal exposure can increase quickly.

Here’s how encryption makes a difference:

• Encrypted data may exempt you from breach notifications. If files were properly encrypted and remained unreadable, you may not need to notify customers or clients - saving time, money, and reputation.
• Weak or no encryption strengthens the plaintiff’s argument. When data isn’t protected, claimants can argue your business failed to take basic precautions. That can shift a dispute into negligence territory.
• Regulatory agencies look for encryption. The New York Attorney General’s Office will evaluate encryption as part of your overall security posture during any investigation.

For businesses facing breach of contract claims tied to data mishandling, encryption often becomes a central part of the legal strategy. Done well, it’s a layer of defense. Ignored, it becomes a vulnerability.

When “Secure” Isn’t Secure Enough: What Courts Really Think About Encryption

Using encryption doesn’t automatically protect your business. Courts look at how you used it and whether it actually worked.

Here’s what they expect:

• Current, industry-standard encryption. Algorithms like AES-256 are widely accepted. If you’re still relying on outdated methods, they may not hold up in court.
• Keys stored securely. If encryption keys are stored with the encrypted data, the protection may be meaningless. Courts want to see deliberate, isolated key management.
• Evidence the encryption was effective during the breach. If attackers accessed and decrypted the data, the encryption defense likely won’t apply.

Encryption must be proactive, not reactionary. Courts are increasingly skeptical of security measures implemented after a breach. They want to see it in place as part of everyday data practices.

If your company is involved in a commercial lawsuit, encryption records may be subpoenaed. Opposing counsel will likely ask how, when, and where you encrypted the data and whether the methods used actually prevented unauthorized access.

Encryption Only Works When It’s Built the Right Way

Encryption isn’t a one-size-fits-all solution. If your business handles financial records, health data, client information, or anything considered sensitive under New York law, you need a well-thought-out encryption plan. It has to be intentional and it has to work.

Here’s what that looks like:

• End-to-end encryption. This ensures data stays encrypted from the point it leaves the sender to the point it reaches the intended recipient. It’s a must for messaging systems, file sharing, and cloud storage.
• Encryption at rest and in transit. Data stored on a device or server should be encrypted. So should data traveling across a network. Both are equally vulnerable if left unprotected.
• Automated key rotation. Don’t rely on the same encryption key indefinitely. Rotating keys reduces the window of opportunity for attackers.
• Updated encryption libraries and protocols. The threat landscape evolves constantly. If your software is out of date, even the strongest encryption can become obsolete.
• Employee training. Human error remains one of the biggest threats to data security. Make sure your team knows how to use encrypted systems properly and understands why it matters.

Other important practices include:

• Separating encryption keys from encrypted data
• Using hardware security modules or secure key management platforms
• Logging and monitoring access to encrypted data
• Including encryption in your incident response and recovery plans

For companies already navigating legal conflicts, working with a seasoned partnership dispute attorney can help protect business interests. But if your encryption is strong and verifiable, it may prevent many of those conflicts from arising in the first place.

Protecting What Matters with Horn Wright, LLP

If your company is preparing for a data breach response, or simply strengthening how it handles sensitive information, we’re here to help. 

Our commercial litigation lawyers at Horn Wright, LLP, guide New York businesses through legal and compliance challenges tied to cybersecurity. We help you implement practices that meet both legal standards and industry expectations.

When you’re ready to move forward with confidence, one of the best law firms in America is here to offer unwavering support.

Contact us online or call (855) 465-4622 to schedule your complimentary case evaluation.