Business Law Guidance on Ransomware, Cyber Extortion, and Payment Risk

Ransomware used to sound like a problem for large corporations with sprawling IT departments. Today, it is just as likely to affect a closely held business, a professional services firm, or a growing company that never thought it would be a target.

What makes ransomware particularly challenging is not just the attack itself, but the decision that often follows quickly afterward: Should we pay?

That decision is rarely just a technical one. It can carry legal, contractual, insurance, and regulatory consequences that many businesses do not fully appreciate until they are already under pressure.

As a business attorney licensed in Pennsylvania and New York, Todd Nurick of Nurick Law Group regularly advises companies navigating risk that sits at the intersection of technology, contracts, and governance. Business law guidance on ransomware risk has become increasingly important as cyber incidents evolve from IT disruptions into enterprise-level legal events.

Why Business Law Guidance on Ransomware Matters

Ransomware attacks create urgency. Systems are down. Data may be inaccessible. Customers, vendors, and employees are affected. In that environment, businesses often focus on restoring operations as quickly as possible.

What is often overlooked is that paying a ransom can implicate legal obligations, sanctions risk, insurance conditions, and contractual representations. The decision to pay or not pay can have consequences long after systems are restored.

This is why ransomware is no longer just a cybersecurity issue. It is a business law issue.

Is Paying a Ransom Even Legal?

In some circumstances, paying a ransom can expose a business to legal risk.

Certain threat actors are associated with sanctioned entities or jurisdictions. Making payments to those actors, even under duress, can raise regulatory concerns. Businesses rarely have the time or information to assess this fully during an active incident.

This is one reason many companies involve legal counsel early, not after a decision has already been made.

Insurance Does Not Automatically Solve the Problem

Some businesses assume that cyber insurance will dictate or cover ransom payments. That assumption can be dangerous.

Insurance policies often include conditions, exclusions, and notice requirements that affect coverage. Some policies require insurer consent before payment. Others limit coverage depending on how the incident is handled.

A rushed payment made without coordination can jeopardize coverage or reimbursement.

Contracts and Disclosure Obligations Are Often Triggered

Ransomware incidents frequently implicate contractual obligations.

Customer agreements, vendor contracts, financing arrangements, and even employment agreements may include notice requirements related to data access, system availability, or security incidents.

Failing to assess these obligations early can compound risk and create disputes unrelated to the original attack.

Governance and Board-Level Oversight

For many organizations, ransomware response now falls squarely within governance responsibilities.

Boards and executives are increasingly expected to understand:

• how incidents are escalated

• who has authority to make payment decisions

• what documentation exists

• how risk is evaluated

A lack of structure or clarity can turn an already difficult situation into a governance failure.

Practical Business Law Guidance on Ransomware Risk

Businesses do not need to panic, but they should prepare.

Practical steps include:

• understanding incident response roles before an event occurs

• coordinating legal, insurance, and IT planning

• reviewing contracts for notice and disclosure obligations

• documenting decision-making authority

• aligning cyber response plans with governance expectations

Preparation does not eliminate risk, but it reduces the likelihood of compounding it.

Final Thoughts

Ransomware incidents move quickly, but their legal consequences do not disappear once systems come back online. Businesses that treat ransomware solely as an IT problem often discover later that legal exposure was created along the way.

Todd Nurick and Nurick Law Group provide business law guidance to companies in Pennsylvania, New York, and nationally on ransomware risk, incident response planning, governance, and contract alignment.

This article is for informational purposes only and is not legal advice. Reading it does not create an attorney–client relationship. Todd Nurick and Nurick Law Group are not your attorneys unless and until there is a fully executed written fee agreement with Todd Nurick or Nurick Law Group.

Sources

Federal guidance on ransomware response and payment considerations

Industry analysis on ransomware trends and business risk

Cyber insurance policy guidance and claims considerations