Australian Clinical Labs Case: Lessons in Cyber Response & Communication

The judgment in brief

In this case, ACL acquired the assets of Medlab Pathology Pty Ltd on 19 December 2021. It assumed control of Medlab’s IT systems, which over 223,000 individuals’ personal and sensitive information (including health and contact data) was held on. (judgments.fedcourt.gov.au)

Shortly after acquisition (on or about 25 February 2022) a ransomware group (the Quantum Group) launched a cyberattack, and ultimately 86 GB of data was exfiltrated and published to the dark web.

The Court found that ACL failed to take “such steps as are reasonable in the circumstances” under APP 11.1(b) of the Privacy Act 1988 (Cth), had an inadequate assessment of whether there was an eligible data breach (contravening s 26WH), and failed to give the required statement to the Commissioner (contravening s 26WK).

The penalty ordered: $5.8 million in civil penalties plus a cost contribution.

The judgment emphasises that ACL was aware it was operating in a “high cyber-threat landscape.

Why external advice and communication matter (and why things went wrong here)

Looking at the judgment through the lens of external advisors (e.g., cybersecurity firms), and the communication channels between them and the organisation, reveals several key lessons.

1. Advice cannot be taken as a “tick-box” and ignored

In this case, ACL was using the services of an external cybersecurity provider (StickmanCyber) which was engaged to review processes and controls.

However, the Court found that reliance on that firm’s narrow investigation (monitoring only 3 out of 127 infected computers, not investigating persistence, etc.) was unreasonable.

This highlights that simply having an external advisor is not sufficient, the quality, scope and rigour of the advice matter, and an organisation must engage actively with it (not just accept “we’re fine” statements).
Lesson: Ensure external advice is bespoke, deep, and challenges assumptions; not just a standard review.

2. Clear communication of scope, limitations and next-steps is essential

The judgment records that StickmanCyber sent an internal email on 25 February 2022 stating:

“…I don’t feel that this will happen and it is merely a scare tactic, however, to err on the side of caution I would suggest that you prepare a statement stating that there was a malware incident but no data has been exfiltrated nor lost and the incident is being controlled…” (judgments.fedcourt.gov.au)

That email shows ambiguity: the advisor expresses a belief (“don’t feel that this will happen”) but also a suggestion to prepare for a worst case.
Later, evidence showed exfiltration had in fact occurred, but the assessment had ceased by 1 March 2022. (judgments.fedcourt.gov.au)

Lesson: When engaging a cybersecurity firm you must ensure they clearly communicate both what is known, what is unknown, and the actionable next-steps. Advisory reports should make clear what investigations stop short of, where uncertainty remains, and when re-assessment is needed.

3. Governance and escalation of external advice must be well-structured

In ACL’s case, although there was a steering committee including the CIO, CFO, CEO, etc., the Medlab IT team leader had no formal incident-response training, and key monitoring/logging or data-loss tools weren’t in place.

The judgment emphasises that simply relying on the third-party provider without proper internal governance and oversight is insufficient.

Lesson: External advice doesn’t substitute for internal governance. You need clear roles, trained personnel, timely escalation, and integration of external advice into decision-making — especially around incidents. External advisors should feed into a structured governance framework that ensures decisions are made, verified and documented.

4. Time-sensitive communication and prompt decisions matter

The Act imposes obligations to assess whether there was an eligible data breach within 30 days once the entity is aware of reasonable grounds.

Here, because the external advice was limited, and internal decisions proceeded on incomplete information, ACL failed to meet that obligation. The delay in notification meant regulatory functions were delayed.

Lesson: Time deadlines exist in regulation — internal and external advice needs to feed timely action. Ensure external providers are engaged with urgency, and that their communications support rapid decision-making (not just retrospective analysis).

5. Ownership of risk remains with the organisation — external advice is part of the chain

The Court stressed that “the obligation … not to be capable of being discharged simply by delegating it to another entity and doing nothing more” (in the context of “reasonable steps” obligations).
In other words, even if you engage a cybersecurity firm, you cannot simply hand over the problem and regard your obligation as done. The organisation must remain actively involved, review the advice, challenge it, make decisions, document them, and ensure follow-through.

Lesson: Think of external cybersecurity firms as part of your ecosystem — but the board, CISO/CIO and senior leadership must stay actively engaged. You are still accountable.

6. Transparency and clarity in reporting and communication with stakeholders

At multiple points ACL communicated internally and to boards that “no exfiltration detected” and “we believe no personal health information compromised.”

Yet the external facts (86 GB published) told a different story. The gap between initial communication and eventual reality underscores risk to reputation, legal exposure, and regulatory response.

Lesson: External advisors must help not only with technical investigation, but with framing communications — internally (to board, senior execs) and externally (regulators, stakeholders). Mis-characterising the incident (even unintentionally) can increase risk.

7. Ensuring advisory scope includes investigation AND monitoring AND verification

In the judgment, the external firm’s investigation was limited: only a few devices, one firewall log, limited scan for dark web exposure, cessation of investigation by 1 March.

But the exfiltration was published on 16 June. The failure to keep monitoring and verification meant the initial advice (“no exfiltration”) turned out to be wrong.

Lesson: Cybersecurity advisory work must include not just immediate incident response, but ongoing monitoring, verification of assumptions (e.g., “no exfiltration”), and alignment of technical evidence with intelligence (dark web, threat actor tactics). Agree upfront on what “done” means, and what signals will trigger re-assessment.

Key take-aways for service providers and law-firm clients

Given your focus (law-firms, risk-advisory, LinkedIn outreach etc.), here are some practical take-aways you might turn into blog posts, LinkedIn carousels or client-advice content:

• Message for clients: “When choosing a cyber-security firm, ask specifically how they will communicate findings, what uncertainty remains, and what decisions need to follow — not just ‘we’ll fix your systems’.”
• Message for advisory/content: Use this judgment as a case-study of how external cybersecurity advice intersects with regulatory duties under the Privacy Act (eligible data breach, notification timelines) and why mis-alignment or communication gaps increase risk.
• Service offering angle: For law-firms especially (with sensitive client-data, APRA-style regulatory exposure, reputational risk) the differentiator is not only technical remediation but also communication, governance and decision-support. Position your offering accordingly.
• Content piece idea: “3 questions your cyber-security firm should answer before you start an incident response: 1) What is the scope and limitation of our investigation? 2) How will updates be communicated (board, regulator, clients)? 3) What decision-points do you expect us to escalate — and when?”
• Risk mitigation suggestion: Encourage clients to conduct “advisor readiness” reviews: when we engage an external cyber-firm, have we clearly defined the scope, defined internal roles, established escalation paths, agreed communication templates/agents, aligned technical investigation with regulator obligations?

Final thought

The ACL judgment is a valuable reminder that cyber-risk is not just about firewalls, malware signatures or patches. It’s also about how we interpret, act on and communicate the results of our investigations, particularly when external advisors are involved. Good cybersecurity advice must be technically sound and must empower the organisation to make timely, documented decisions, communicate appropriately, and align with regulatory duties.