Menu Search through site content What are you looking for?
Menu

Expanding Global Security Risks Require Experienced Legal Advice and Representation

  • Market Insight 17 January 2020 17 January 2020
  • Americas

  • Insurance & Reinsurance

According to a study issued last year by a bipartisan group of national security and budget experts, the United States government has spent more than $2.8 trillion on counterterrorism since 9/11. That amount represents 15 percent of the nation’s discretionary budget[1]! It is a virtual certainty that the amounts spent in other countries have all increased and continue to do so as global tensions rise and disparate forces use social media to fan the flames of discontent and disseminate the means

As we have all come to learn, "soft targets" include churches, synagogues and mosques as well as schools, malls, restaurants, concert venues and hotels.  They are all places where people gather to worship, learn, shop, eat, sleep and play.  While no one should dispute that the government has the primary responsibility for keeping these places safe and secure, one need only look at the news on any day to realize that the government cannot guaranty safety and security to all.

According to a report published in The Guardian two years ago[2],

The global market for private security services, which include private guarding, surveillance and armed transport, is now worth an estimated $180bn (£140bn), and is projected to grow to $240bn by 2020. This far outweighs the total international aid budget to end global poverty ($140bn a year) – and the GDPs of more than 100 countries, including Hungary and Morocco.  

The foregoing does not include the costs of insurance and costs associated with emergency response, business interruption and third party litigation.  By way of reference, the estimated amount of insurance paid worldwide related to 9/11 was in excess of $40.2 billion, the amount to repair the subways in excess of $7.5 billion, the amount to fund the government's still operative Victim's Compensation Fund, almost $20 billion and almost $2 billion expended to settle the claims asserted against the two airlines whose flights were hijacked.  More recently, the hotel where the Las Vegas shooter stayed and its insurer announced a settlement of $800 million.  Additionally, according to Fortune and the Wall Street Journal, casinos, hotels, entertainment venues and commercial property owners and operators are adding active shooter events as risk factors in their annual reports to investors[3].   

The foregoing demonstrates without doubt that the economic impact of security related costs is staggering.  It also is quite evident that this threat is global in nature and effect.  Religious and nationalist extremist groups, the internet, climate change and global migration patterns, all of which are core factors driving this threat are not confined to national boundaries.   Indeed, the courts have held that a hotel in India is subject to jurisdiction in the UK for claims arising out of an attack that took place in Mumbai[4].

Given the enormous costs and the widening exposure to private entities and their insurers, our firm has decided to pool our global resources to address these developing issues.  What we have found is that the law is still developing to address these emerging issues.  We have also concluded that experienced and broad based legal representation is key to preparing for and addressing these issues.     

We believe that the starting point for all entities considering or reviewing the implementation of any security measures is understanding the legal requirements in the jurisdictions which they operate.  They also need to be informed and fully understand the regulatory and third party liability consequences for failing to do what the law requires.  That knowledge is critical to determining the type of security measures which may be required and the insurance coverages needed to address the consequences of any security related incidents.  We further believe that obtaining that advice within the umbrella of attorney client privileged communications protects the content of this discussion and allows for free and open debate of the best course to follow.

In addition to understanding the applicable legal and regulatory requirements and the insurance coverages related to same, we believe that access to security experts in the field as well as analytical tools which can be used to assess the risks facing a particular location or business entity are important to have access to.  We have developed good working relationships with a wide range of subject matter experts and utilized analytical tools which can help assess the potential risk, as well as recommend and help implement appropriate security measures.  We also work closely with insurers who provide coverage and legal defense for when claims arise.

When incidents occur, it is extremely important to have counsel familiar with your business and the issues that will likely arise.  Emergency response, law enforcement cooperation and the investigative process take first priority.  Business recovery, media messaging and third party litigation are secondary but equally critical and in need of experienced counsel.  These events do not provide the time for on the job training or legal defenses born out of speculative thinking.

When incidents occur, it is extremely important to have counsel familiar with your business and the issues that will likely arise.  Emergency response, law enforcement cooperation and the investigative process take first priority.  Business recovery, media messaging and third party litigation are secondary but equally critical and in need of experienced counsel.  These events do not provide the time for on the job training or legal defenses born out of speculative thinking.

We have provided legal representation to target defendants in the 9/11 attacks as well as the Underwear Bomber attack and in numerous other matters around the world.  We have also taken the lead in regulatory investigations and inquests that have been the subject of global media attention.  We are currently providing advice related to the disturbances in Hong Kong and for numerous other incidents around the globe.   We don't just provide this advice from afar but have offices and partners located around the globe who live and work in the jurisdictions where these incidents occur.

We understand these issues and many of our partners have been personally impacted by same.  We also believe we can help drive how the law develops so that private interests are not foisted with security responsibilities that rightly belong to governmental, not private party entities or their insurers. By way of example, the legal holding of the litigation arising out of the Lockerbie litigation was that air carriers were subject to common law duties and that following federal regulations were only some evidence of compliance[5]. Although the 9/11 litigation was venued in the same jurisdiction, attorneys on our team ultimately convinced the court that an air carrier's security obligations were not governed by common law standards but instead, preempted by federal law and that compliance with federal regulations were a complete defense[6].  Within days of that ruling, the New York Times accurately reported that the last passenger family agreed to finally resolve all remaining litigation [7].

We are proud of our experience and the results we have achieved in this area of the law.  We are also mindful that the law in this area is not yet settled and that the obligations that the law may come to impose are of a "bet the company" scale.  More importantly, we are mindful of the personal loss that may occur and how private entities, like government entities, have a role to play in preventing this type of incident.  Providing the advice necessary to allow them to understand and fulfill that role while at the same time standing ready at a moment's notice to represent them and their insurers' interests when an incident occurs is what we have formed this practice group to do.  

We welcome the opportunity to discuss our services and assist any parties or insurers dealing with these security issues wherever they may arise. 

 

Footnotes

[1] See, See May, 2018 report issued by Stimson Center, "COUNTERTERRORISM SPENDING," available at   https://www.stimson.org/sites/default/files/file-attachments/CT_Spending_Report_0.pdf

[2] See, https://www.theguardian.com/inequality/2017/may/12/industry-of-inequality-why-world-is-obsessed-with-private-security

[3] See, https://fortune.com/2019/08/08/casinos-active-shooters-risk-factors/ and https://www.wsj.com/articles/a-new-risk-factor-in-corporate-disclosures-active-shooters-11565170202 

[4] http://securehotel.us/15-february-2016-mumbai-attack-hotel-lawsuit-settled-trends-re-jurisdiction-and-liabilities-demonstrated/

[5] See, In re Air Disaster at Lockerbie Scotland, 37 F.3d 804, 815 (2d Cir. 1994).

[6] See, Bavis v UAL Corp., 811 F. Supp. 2d 883, 887-893 (SDNY 2011).  

[7] See, https://www.nytimes.com/2011/09/20/nyregion/last-911-wrongful-death-suit-is-settled.html

End

Stay up to date with Clyde & Co

Sign up to receive email updates straight to your inbox!