As clients put more pressure on firms to show they have a proactive information security plan, law firms are prioritizing technology risk management and cyber liability insurance. The pressure is coming as data breaches are on the rise and supply chain risk management and due diligence is becoming a hot topic. While the term cyber security alone may scare you, the task of protecting your environment is not as daunting as it may seem. Because of the increased awareness, more firms are purchasing cyber liability insurance and are taking all available precautions to protect themselves and their clients from the escalating risk to sensitive information which has been entrusted to their care.
This is an excerpt from an article that was published in the KCMBA Counselor and written by Travis Holt. To read the article, click here.
I’d guess that before this weekend, Kate Upton and Jennifer Lawrence hadn’t ever seriously thought about the impact of a data breach. They’re not alone! It was announced this morning by many sources that there appears to be a credit card breach at Home Depot bigger than Target. Last week 4.5mm healthcare records were compromised in a breach of one of our largest healthcare systems and locally in Kansas City, Children’s Mercy Hospital lost 4,500 employee records. Each day, a few more people are starting to take this risk seriously but we still have a long way to go.
What is your law firm doing to protect your individual attorneys and the firm from this exposure? In addition to the breaches mentioned above, Goodwill Stores announced yesterday that they suffered a breach due to the failure of a third party vendor. Do you know what vendors have access to your data? If they’re responsible for a data breach, will they cover the costs of the breach or are you stuck with that?
These are all questions you should address and also understand if and how your legal malpractice policy will respond to a data breach. If it does provide protection, it will be incredibly limited and you may need to explore a cyber liability insurance policy to supplement your legal malpractice coverage.
According to a recent Law360 article, weak engagement letters are to blame for a flurry of recent legal malpractice claims. The article, which you can read here, discusses the use of engagement letters in recent legal malpractice claims and says in 65% of the cases, an engagement letter wasn’t used. It goes on to say that in only 5% of the cases, there was a well drafted engagement letter that limits the law firms liability.
While there are many things we recommend law firms to do craft strong engagement letters, here are three tips:
- Do not provide any guarantees
- Be very clear with the client about the project you were hired for
- If the client is new to the firm, get a retainer and make sure it is substantial