Special Litigation Committee Good Defense Against Derivative Suits

In a Today’s General Counsel article, attorneys from the law firm Kibbe & Orbe look at some potential and increasingly likely fallout from a data breach: a shareholder derivative lawsuit. Just as companies are building up their defenses against data breaches, their legal departments should be planning responses against these suits, which typically allege that corporate officers and boards of directors have breached their fiduciary duties by failing to implement reasonable safeguards against cyber-theft. One important tool for any corporation facing a shareholder derivative action is the special litigation committee.