September 30, 2005
Cyber Insurance for Law Firms
The September 2005 issue of Law Practice, the publication of the Law Practice Management Section of the ABA, includes an article dealing with insurance coverage for a cyber attack against law firms.
It appears that most law firms think their present insurance policies will come to their aid if a hacker destroys data or interrupts their business operation. The law firm not only faces the risk associated with that direct damage but they could find themselves liable to third parties (clients) who suffer as a result of the impact on the law firm.
Law firms are expected to maintain appropriate security against cyber attacks. The problem is that we all know that no security measures can provide 100% protection. Insurance is not an alternative for prudent measures. You will find those measures a requirement to obtaining coverage.
Insurance is something every firm should consider but it will not come cheap—anticipate $12,000 to $20,000 per million dollars of insurance coverage.
The authors, Sharon Nelson and John Simek, predict that carrying cyber insurance will be a standard practice ten years from now. They observe that a cyber-catastrophe could devastate a law firm. At the very least, lawyers should be cognizant of the dangers and should investigate the cost of protection.
PS: The cyber-catastrophe risk is another reason for using an online backup service. See the related post of September 23, 2005, Online backup and recovery services for law firms.
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Filed under Risk managment by Tom Collins