The Importance of Cyber Security Insurance for Law Firms

Written by Lauren Erdelyi6 minutes well spent
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In today’s hyper-connected world, clients expect law firms to have all the right measures in place to protect their sensitive information.

Along with strong security protocols, cyber security insurance for law firms is a powerful component of a risk management strategy. In particular, it provides financial coverage that can help solo practitioners and small law firms recover from costly data breaches, ransomware, and other types of nefarious attacks.

Unsure where to get started? Read on to learn how to get the right coverage for your firm.

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What does cyber security insurance cover?

Generally speaking, there are two types of cyber insurance coverage for law firms.

First-party cyber liability insurance supports law firms with the direct financial impact of a breach or cyber attack in their network or system. This can range from fees associated with restoring data, income loss due to downtime, crisis management, or forensic investigations—to name a few examples.

On the other hand, third-party cyber liability insurance protects law firms from liability claims against them in the event of a breach. Coverage can span from payments to clients whose data is affected to regulatory fines for noncompliance.

Law firms can opt to have first-party coverage, third-party coverage—or a combination of both. Ultimately, it depends on the firm’s circumstances and the level of protection that’s best.

How cyber security insurance protects law firms

Cyber security insurance can help minimize the financial impact of cyber attacks. It covers the direct cost of data breaches and cyber attacks, as well as lawsuits that may arise from one. In exchange for this protection, law firms pay a monthly or quarterly fee to an insurance provider.

Typically, cyber security insurance won’t provide coverage for property damage and loss of intellectual property.

How to get cyber security insurance for your law firm

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It may feel daunting to explore all of the options for cyber security insurance. But it doesn’t have to be. Here’s what you need to know to protect your law firm.

Determine what you need coverage for

The first step is to conduct a comprehensive audit of the cyber security threat landscape within your law firm. This will allow you to better understand your current risk, along with specific areas that you need to protect. You’ll want to be clear on your most critical data—in other words, your “crown jewels”—so you’re investing the most resources in safeguarding them.

Once you’ve gained a clearer picture of your security risk, you’ll be one step closer to understanding the amount of coverage needed. There isn’t a clear formula for determining that. Rather, spend time reviewing your audit, assessing your budget, and choosing a coverage that best suits the needs of your firm. For instance, a larger firm that handles a significant amount of highly confidential information like medical records will want to invest in extra protection.

Shop around for the right policy

Nowadays, there are a plethora of prices and coverage options available for cyber security insurance for law firms. The next step is to do your due diligence and receive multiple quotes from providers.

Take the time to thoroughly read the terms and conditions within each policy. Ask providers thoughtful questions and gain clarity when you need it. And most importantly, understand what type of incidents are covered—as well as which aren’t. For example, it’s helpful to know whether there are geographic restrictions for coverage, especially if your team is frequently on the road.

To cut down on time, consider leveraging Clio’s online directory of experienced law firm consultants. Finding an experienced insurance provider who understands the unique needs of our industry can provide optimal coverage and peace of mind.

Talk to other attorneys

As you seek to find the best cyber security insurance policy for your law firm, other lawyers can be an invaluable resource. Speak to your peers to learn about their own experiences and learnings in choosing a cyber security provider.

Looking to expand your network? At Clio, we have a range of articles that shine a light on the power of mentorship and networking in the legal industry. We recommend perusing this guide on legal mentors, along with our round-up of attorney networking tips.

Work with an insurer that specializes in cyber security insurance for law firms

Given the highly sensitive nature of legal work, it makes sense to use an insurance provider specializing in the legal industry.

Working with an insurance firm with experience in helping lawyers will ultimately ensure you have a partner who truly understands your unique needs and risks.  If you’re not sure where to get started, check out this list of Clio Certified IT Consultants.

Take precautions to protect your data

Finally, be sure to take steps to protect your data and information. The American Bar Association’s 2022 Legal Technology Survey Report found that 27% of respondents had experienced a security breach at some point. Clearly, law firms can do much more to prevent these costly attacks.

To start, take stock of the data security measures at your firm. This includes everything from spam filters to firewalls and anti-virus software.

Educate your staff on how they can play a role in combating risks, too. This training should be ongoing, and highlight how to create secure passwords, spot malicious emails, safely browse the web, and more.

Interested in learning more about improving your cyber security measures within your law firm? Read our in-depth look at how to protect your data.

Work with trusted legal practice management software providers

It’s equally as important to choose software providers you trust, like Clio Manage. Each year, our platform is tested by a leading cyber security firm to ensure it’s secure. Clio is also audited and certified every day by McAfee Secure to verify that our products aren’t affected by malware, vulnerabilities, and other online threats. Learn more about how the cloud is safer than on-premise servers in this article.

A final word on cyber security insurance for law firms

For all the efficiencies that technology delivers, one downside is that it also brings an increased risk of cyber threats. Sometimes, the damage can be so severe law firms simply can’t recover from it. In fact, one study found that 60% of small businesses close after a cyber attack.

Although law firms can never be entirely secure, they can take steps to dramatically reduce their risk. That’s why cyber security insurance for law firms is so powerful. It mitigates the financial costs to a law firm when attacks strike—helping lawyers get back to doing the work that truly matters.

However, it’s also important to take steps to mitigate the possibility of a cyber attack happening. Read our 2023 Law Firm Data Security Guide for more information.

Categorized in: Business

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