Professional Liability Insurance Or Cyber?

Discussion paper: Lawyers professional liability insurance versus cyber liability insurance (Stuart Pattison, May 2014) – Over the last few years, law firms have been making significant investments in network hardware and software for the operation of their business, including the protection of client data. There is now also increased interest by law firms in purchasing Cyber Liability Insurance, primarily in response to increased scrutiny by clients as to what steps they are taking to improve security of data. In some cases, clients will even audit law firms to ensure compliance with their required standards. Buying Cyber Insurance can provide clients comfort that data security issues are being addressed since insurers have an interest in learning what steps are being taken to mitigate the risk for claims that could fall within the terms of the policy. In addition, Cyber Insurance provides a source of recovery in the event the client incurs financial loss due to a data breach emanating from the law firm. A second driver for these investments is reputational risk and the belief by law firms that loss of client confidence could have significant negative consequences. Of course, law firms have always had an ethical obligation to keep their clients information confidential and secure; indeed it is the cornerstone of the attorney-client relationship and the advent of the internet has not changed those duties. What has changed is the ease by which large amounts of data can be stored, managed and transmitted, and the increased opportunities for third parties to steal information. [ Polley : Interesting paper. Stuart has been involved in the evolution of cyberinsurance-for-lawyers from the very beginning.]

Provided by MIRLN.

Image courtesy of Miles.