Law firms face a variety of challenges to be successful. From data security to professional services to employment-related matters, managing risk for legal professionals can be complex. Fortunately, proper insurance for your law firm can help you transfer these risks. Below are three major threats impacting your legal profession today and multiple reasons why you need insurance for your law firm.
Cyber-crime is the most significant threat to your law practice. Lawyers must protect privileged client information. Yet despite daily notifications about the latest data breaches, many law firms still suffer from “cybersecurity fatigue” – a sensation of feeling overwhelmed by the need to stay alert to the latest threat.
Reasons why law firms are ideal targets for cyber attacks:
- Law firms handle sensitive information
- Many firms believe they are “too small” and maintain minimal or no cyber protection
- Law firms have a responsibility for taking care of funds in escrow
The spike in cyber-related crimes has forced law firms to reconsider how information is stored and collected.
Some of the more common examples of cybercrime include:
- Theft of intellectual property
- Theft of personal and financial data
- Damage and destruction of data
- Stolen money
Traditional Commercial General Liability (CGL) policies specifically exclude certain liabilities that result from a cyber-attack.
In recent years, there have been increased regulations on businesses about cyber protection. Many law firms are now being asked to show evidence of cyber liability insurance in addition to other forms of cyber protection.
Reasons law firms purchase a standalone Cyber Liability Insurance policy are to avoid:
- Lost productivity
- Post-attack disruption to the normal course of business
- Forensic investigation expenses
- Cost for restoration and deletion of hacked data and systems
- The expense to repair the firm’s reputation
Law firms without cyber liability insurance coverage lack the understanding of how valuable the proper coverage is for the inevitable data breach.
When it comes to cyber liability coverage, each insurance company’s policy is unique, and to better understand the different options available, work with an experienced insurance broker to secure the right cyber insurance policy for your firm.
Lawyers Professional Liability (LPL) insurance is designed to provide coverage for claims that arise from “wrongful acts” committed in the rendering of legal services in the lawyer’s capacity and generally provide both indemnification coverage and claims expense coverage.
In recent years, Lawyers Professional Liability claims have increased in cost and complexity.
According to the American Bar Association (ABA), the top 5 legal malpractice claims are:
- Failure to know and apply the law
- Planning error
- Inadequate discovery and investigation
- Failure to file documents
- Failure to calendar
Your LPL insurance will protect your firm’s financial future. To avoid potential gaps in coverage, speak with an insurance professional who understands the risks associated with law firms today, and purchase proper insurance for your law firm.
Employment Practices Liability Insurance (EPLI) includes coverage for defense costs and damages related to various employment-related claims including allegations of discrimination, wrongful termination, and sexual harassment.
Over the past few years, many EPLI claims have been attributed to:
- Increase of workplace sexual harassment allegations (most notably the #metoo movement)
- Discrimination claims related to an aging workforce
- Social changes and human rights (most recently LGBTQ rights in the workplace)
One of the best ways to prevent or minimize future claims is to have clear written policies in the employee manual regarding discrimination, harassment, and conduct.
Working with an experienced insurance broker will help you better understand what coverage is available to your firm. Don’t make the mistake of thinking you’re immune to it all!
Opinions expressed in this article are solely the author’s opinion. Not intended to provide the reader with legal or any other professional advice. Should you need advice or opinion, consult with a qualified professional to address your specific needs.