Can Corporate Counsel Tame Cloud Computing?

Posted on 10-30-2012 by
Tags: Real Law

Brought to you by the Real Law Editorial Team

Owning data can be like owning a tiger. Both are extremely powerful and useful—even essential—for your particular business. Specific laws govern how both are to be treated and maintained. It is also very, very bad if you lose either of them.

Which brings us to cloud computing, the model where you hand your tiger over to a zoo for safekeeping. As corporate counsel, you need to understand, and be involved in, the business more than ever before. You need to learn the language of the cloud and prepare to advise senior management on the legal issues that will certainly arise.

Wild About the Cloud

The idea is easy to understand: the “zoo” has vastly more resources and efficiencies. It can protect and maintain your precious tiger with more expertise than you have in-house. Thanks to the Internet, this is possible for your corporate data. According to the contract you sign, you are allowed access anywhere in the world, 99.999% of the time. There are hundreds of articles out there to help you understand how the cloud works.

Everyone Loves the Zoo

Some experts think that cloud computing could cut corporate IT costs by half. Because of their scale, cloud providers can ostensibly pay for the best in technology and expertise, which translates into better reliability and security than a company could manage in-house. The cloud also adds flexibility, with usage-based fee structures and the ability to scale performance up higher than any typical corporate IT department could even dream of. With such a formidable upside, there needs to be a considerable downside for cloud adoption to be even debatable. Unfortunately, there is.

Data Escapes More Often Than Tigers

The debate over cloud computing usually begins with security-related concerns. IT professionals question whether service providers can be trusted to look after critical and confidential business data. They are wary for good reason: there have been a lot of high-profile escapes. For reasons ranging from aggressive hackers to negligence to bad luck, many cloud-powered companies have lost data, including Twitter, LinkedIn, Microsoft, and even Blue Cross. The consequences for American business are measured in billions of dollars.

The Role of Counsel

Despite the risks, the cost benefits—and the hype—associated with cloud computing mean that CEOs and business owners are ready to say “yes.” This brings us to two groups whose job is often to say “no”: the IT department and corporate counsel. Both will need to work together to carefully guide the company’s almost inevitable rush into the cloud, helping it avoid the pitfalls. Success will require more of a “yes, but…” model, but offer the opportunity for this unusual new partnership to lead the way.

How and where the data will be stored? What are the privacy and security measures that will protect the data? How are backups managed and contingencies planned? It will be up to IT to ensure that this is all done correctly from a technological standpoint. Corporate counsel will need to ensure that the company is adequately protected from a legal standpoint.

Know the Laws. All of Them.

The legal side of the cloud includes knowing the relevant laws to ensure that corporate interests are protected contractually. The field is diverse and constantly changing, and involves work that will be new to most lawyers. You will need to do due diligence on all potential cloud vendors and negotiate strict terms and conditions governing their stewardship of your data. That will require research and very good tools.

For example, can these vendors meet any data security requirements specific to your industry, such as HIPAA or GLBA? What about meeting notification requirements in case of a data security breach? Those standards can vary across all 50 states. You will need to know the jurisdictions and how they apply.

Get a Strong Leash

To keep cloud computing from becoming a circus, you should be ready to keep a tight rein on cloud operations with specific rules and guidelines. These will guide both internal groups and third parties like outside counsel and service providers in how they deal with the cloud to keep your company protected. By mastering both the law and the technology itself, you will also be opening up a new way for corporate counsel to further contribute to corporate growth.

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