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Cyber Threats Growing Concern for Law Practices


The Value of Cyber Liability & Privacy & Network Security Coverage for LawyersThe Value of Cyber Liability & Privacy & Network Security Coverage for Lawyers

 

A webinar recently conducted by the American Bar Association (ABA) stressed the importance for businesses such as law firms to adequately prepare for cyber attacks and also underscored the value of cyber liability insurance. In fact, there is a growing number of big corporate clients that are demanding that their law firms step up their game when it comes to guarding against online threats that could compromise sensitive information as global concerns about hacker attacks mount.

In a New York Times article that appeared several months ago, it was noted that Wall Street banks are asking outside law firms to “demonstrate that their computer systems are employing top-tier technologies to detect and deter attacks from hackers bent on getting their hands on corporate secrets either for their own use or sale to others.” Some financial institutions are going as far as requesting that law practices complete lengthy 60-page questionnaires detailing their cyber security measures, while others are doing on-site inspections. The article also cited that other companies are asking law practices to stop putting files on portable thumb drives, emailing them to non-secure iPads or working on computers linked to a shared network in countries like China and Russia where hacking is prevalent. What’s more, in some cases, banks and companies are threatening to withhold legal work from law firms that don’t implement the necessary increased scrutiny or requesting that firms add insurance coverage for data breaches to their insurance programs.

“The vulnerability of American law firms to online attacks is a particular concern to law enforcement agencies because the firms are a rich repository of corporate secrets, business strategies and intellectual property,” stated Daniel B. Garrie, executive managing partner with Law & Forensics, a computer security consulting firm that specializes in working with law firms. “One concern is the potential for hackers to access information about potential corporate deals before they get announced. Law enforcement has long worried that law firms are not doing enough to guard against intrusions by hackers.”

In response to the growing cyber security concern among law practices, the ABA has outlined several Best Practices firms should implement as part of their cyber security plan, including:

  • Ensuring proper background screening for new hires and vendors.
  • Contracting with a breach service provider.
  • Training employees on protecting data.
  • Creating an incident response plan.
  • Conducting an annual risk assessment.
  • Identifying internal vulnerabilities.
  • Keeping current on state and federal disclosure laws.
  • Implementing data encryption.
  • Having robust bring your own device measures.

In addition to these practices, paramount is having the right type of Cyber Liability/Privacy & Network Security insurance policy in place. Of course, there are different policies from which to choose and a law practice should consult with an insurance professional to determine what type of coverage makes sense for them. Basic cyber policies usually cover privacy expenses (notification, forensics, credit monitoring), security liability and electronic media liability. Other coverage options range from cyber extortion to data restoration to system failure. In addition, there are cyber liability polices that can be designed to include prior acts coverage, which is important as a company’s network may have already been infiltrated without its knowledge before the policy was purchased.

Also important is to look at the exclusions a policy may contain. For example, be sure that there is no exclusion for a breach that occurs as a result of an unencrypted laptop or mobile device. And, look carefully at sublimits contained within the policy. You want to make sure, for example, you have adequate limits for forensic coverage.

Axis Insurance Services specializes in Cyber Liability/Privacy & Network Security coverage and can provide the type of coverage law practices need in today’s world of data breaches, malicious virus attacks and other cyber threats. Give us a call at (877) 787-5258 to discuss how we can design a policy to respond to your firm’s needs.

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Blogged on: August 8, 2014 by Mike Smith
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