The LockBit group has finally given up any prospect of extracting a ransom from Royal Mail and published the files it stole from the company in a recent ransomware attack. The leak brings weeks of negotiations to a close, leaving Royal Mail without a decryptor, and LockBit without a payday.

Malwarebytes regards LockBit as one of the five most serious cyberthreats facing businesses in 2023. It was the most widely used ransomware-as-a-service (RaaS) in 2022, by far. It accounted for almost a third of all known RaaS attacks last year, and the largest ransom demand it made was a staggering $50 million. In February 2023 it asked Royal Mail for $80 million.

Alongside the leaked files, the LockBit gang have released a chat history that shows the negotiations between the two parties. Perhaps the group is trying to justify its decision to call off the negotiation and leak the stolen files, or perhaps it's a warning to other victims.

You could read this as a failed negotiation or a missed opportunity for Royal Mail, but I don’t. I think the chat between Royal Mail and LockBit shows something quite different.

I suspect that Royal Mail never intended to pay a ransom. It certainly showed no willingness to engage with the ludicrous $80 million that was demanded of it, and it seems to have had the LockBit negotiator dancing to its tune throughout.

The negotiation began on January 12, 2023, and like any Internet chat, the conversation takes place between two avatars who may or may not be who they say they are. When the LockBit negotiator asks who they're talking to, the Royal Mail’s representative says “I work in our IT.”

Maybe they did work in IT, but having spent years working in IT myself, and after seeing how the Royal Mail’s representative conducted themselves, I will simply say they aren’t like anyone I ever met. Perhaps they’re just naturally good negotiators, or perhaps they listened to our recent podcast about ransomware negotiations, but there is every chance they were actually a professional ransomware negotiator.

In the podcast, ransomware negotiator Kurtis Minder reveals that the first job in a situation like this is to play for time, without annoying the representative of the ransomware gang. A good way to lower the temperature is to adopt the ransomware gang’s self-serving vernacular, he says, and the Royal Mail’s “IT guy” does this in subtle ways, such as referring to LockBit’s criminal activity as “penetration testing.” Ransomware gangs like that sort of nonsense for some reason—maybe it helps them sleep at night.

Playing for time is important because it allows the victim to gather as much information as possible, understand their options, and decide their best response. They need to understand which systems are affected, how the organization can function without them temporarily, and what it will take to restore or rebuild them. They will also have numerous stakeholders to involve and duties to fulfill: Legal obligations must be met, law enforcement involved, cyberinsurance rules followed, customers and suppliers informed, and so on.

Royal Mail consistently succeeds in playing for time with LockBit. Although the first 24 hours of the chat are peppered with urgent and vaguely menacing language designed to rush the victim—“don't delay,” “hurry up,” “our patience is not infinite”—LockBit is quickly dragged into the weeds. The first two weeks of negotiation were almost entirely devoted to a tedious conversation about decrypting large files.

According to Royal Mail’s negotiator “my management have heard that your decryptor might not work on large files.” (This tactic of invoking a demanding or difficult to please manager will be familiar to anyone who’s ever haggled with a salesperson over a car.) Whether Royal Mail's curiosity about large file decryption was genuine or a ruse, it created a role reversal in the conversation, with Royal Mail asking the questions and LockBit providing the answers, to prove that it can meet Royal Mail's needs.

The Royal Mail negotiator also tried to earn trust by positioning themselves as a reasonable go between who’s trying to do the best for both parties. They consistently used language like “I am trying to help our Senior Team understand this,” “I am still trying to work with you here,” “I am doing what I can to drive things forward.”

When the conversation finally turned to money, it quickly found more weeds. This time the thorny undergrowth was formed by a disagreement about who LockBit had actually attacked. LockBit thought it was talking to Royal Mail. The victim told them they’re Royal Mail International, a loss-making subsidiary of Royal Mail with a vastly smaller turnover.

LockBit asked for a ransom of $80 million, 0.5 percent of Royal Mail’s annual global turnover. Royal Mail retorted that using LockBit's calculation, a good “starting figure” would be $4 million, based on Royal Mail International's finances.

At this point in the negotiation LockBit actually acknowledged what it was dealing with. “You are a very clever negotiator,” they wrote, “I appreciate your experience in stalling and bamboozling.”

They might have appreciated it, but they didn't seem able to do anything about it. By this point in the negotiation, Royal Mail was dictating the timeline: “We will not have anything new to speak about until Monday,” “Please confirm you will wait for their [the board’s] decision on Monday”.

LockBit did as it was told and waited. Finally, the last message from Royal Mail arrived on February 6, 2023. It suggested that the company probably never had any intention of paying. "To be honest with you I have heard that they [the board] might not want to pay you for this," it said. "In our perspective the files got leaked when you took them from our system, and paying you won’t undo that in any way."

Ransomware attacks can be devastating, and it's hard to say that being on the end of one is ever a "win" for the target. However, most experts agree that all you can ever do is reduce the chances an attack will occur and reduce the impact if it does. You can only ever play the hand you're dealt, and we think given the hand they were playing, Royal Mail's negotiation came as close to a win as a loss like this ever does.

How to avoid ransomware

• Block common forms of entry. Create a plan for patching vulnerabilities in internet-facing systems quickly; disable or harden remote access like RDP and VPNs; use endpoint security software that can detect exploits and malware used to deliver ransomware.
• Detect intrusions. Make it harder for intruders to operate inside your organization by segmenting networks and assigning access rights prudently. Use EDR or MDR to detect unusual activity before an attack occurs.
• Stop malicious encryption. Deploy Endpoint Detection and Response software like Malwarebytes EDR that uses multiple different detection techniques to identify ransomware.
• Create offsite, offline backups. Keep backups offsite and offline, beyond the reach of attackers. Test them regularly to make sure you can restore essential business functions swiftly.
• Write an incident response plan. The period after a ransomware attack can be chaotic. Make a plan that outlines how you'll isolate an outbreak, communicate with stakeholders, and restore your systems.

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