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, cybersecurity insurance for law firms is another 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.
Do law firms need cyber security insurance?
Any business that stores data online can use the protection that's offered through cyber security insurance.
Why? Because every single day, companies face a myriad of cyber risks. It could be a mistakenly opened phishing email that's compromised a firm's data. A lost or stolen laptop while traveling for work. Or a visit to a fraudulent website that's installed malicious software on a device.
Whatever the circumstance is, law firms are targets for cyber attacks, largely because they deal with highly sensitive and confidential information. This can result in hefty fines, eroded trust, and reputational harm.
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.
What is covered under cyber security insurance?
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
It may feel daunting to get cyber security insurance. But it doesn't have to be that way. 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.
Talk to other attorneys
As you seek to find the best cybersecurity 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.
At Clio, we have a range of articles which 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 insurance for law firms
Given the highly sensitive nature of 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 unsure of 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 2021 Legal Technology Survey Report found that 25% of respondents had experienced a data breach at some point during the year. 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.
It's equally as important to choose software providers you trust, like Clio Manage. Each year, our platform is tested by a leading cybersecurity 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.
Authored by:
Lauren Erdelyi
Lauren is a Vancouver-based writer and editor with a decade of experience writing content for leading organizations around the world. She specializes in translating complex information into clear, compelling narratives that inspire audiences.
About Clio
Clio, the leader in cloud-based legal technology, empowers lawyers to be both client-centered and firm focused through a suite of cloud-based solutions, including legal practice management, client intake and legal CRM software. Clio has been transforming the industry for over a decade with 150,000 customers spanning 90 countries, and the approval of over 65 bar associations and law societies globally. Clio continues to lead the industry with initiatives like the Legal Trends Report, the Clio Cloud Conference, and the Clio Academic Access Program. Clio has been recognized as one of Canada's Best Managed Companies, a Deloitte Fast 50 and Fast 500 company. Learn more at clio.com.