Over the course of a long-term construction project, a contractor and property tenant fell victim to a hacker, resulting in payments diverted from the tenant to the hacker, instead of to the contractor. Hinckley Allen represented the contractor who sued the tenant for breach of contract due to lack of payment on two projects, the tenant having made payments to a hacker upon receiving fraudulent wire instructions via email. The tenant defended that it had already made payment in full for the projects and argued it was not obligated to pay twice. Neither party agreed to bear the responsibility for the loss, and thus proceeded to mediation.

At mediation, our attorneys demonstrated that our client had taken reasonable steps to secure its email and information technology systems against hackers, including conducting regular employee trainings on how to avoid business email compromises and phishing attempts, employing a dedicated IT systems administrator, and retaining a third-party IT firm to monitor its systems. The tenant, on the other hand had not. The tenant failed to verify the new payment instructions – which had been altered to a new method by the hacker – and failed to cease making payments to the hacker even after repeated inquiries from the contractor as to non-payment, putting the tenant in the best position to avoid the loss. The parties ultimately agreed to settle the matter on undisclosed terms.