Amid Hacking Threats, Law Firms Turn to Cyber Insurance

With news of crippling cyberattacks against big companies making regular headlines, more and more law firms are buying cyber insurance to cover the cost of a data breach.

According to insurance brokerage Aon, more than 60 out of the 250 medium and large law firms that it services have purchased cyber insurance within the last two years. Marsh said that close to 40 percent of its roughly 100 large law firm clients have purchased the insurance, up from 20 percent two years ago.

Insurance professionals say the uptick is driven by an increased awareness of the threat of a data breach or hack, as well as a realization that existing law firm insurance policies don’t cover all the costs that could result from such an attack.

“A lot of firms were under the impression that professional liability would pick up almost anything. This is not the case,” said Tom Ricketts, a senior vice president and executive director at Aon. “This has been one of the major debates that we’ve had with law firms over the last two years.” The policies that law firms typically carry, such as lawyers’ professional liability insurance, general liability insurance and property insurance, do not always provide coverage when employee rather than client data is compromised, or when the firm must hire a forensic team to determine what data was lost and how. They also most likely won’t cover the cost of notifying regulators or engaging a public relations firm. Cybersecurity insurance policies are designed to cover those costs. This type of policy has been around since the late 1990s, but previously it was mostly purchased by banks and retail companies.

“For law firms, that awareness of it has hit a tipping point,” said Greg Vernaci, a senior vice president and head of cyber at AIG. “That’s why they’re buying more and more of this.”

Without getting into specifics, Vernaci said the rate at which law firms are buying cyber policies goes up every year. Daniel Garrie, co-head of the cybersecurity practice at Zeichner Ellman & Krause, identified another factor that is pushing firms to buy cyber insurance. “Their clients are compelling the action,” Garrie said. “They’re requiring the law firms to have cyber insurance as a matter of business.”

Insurance professionals said that cyber policies are complicated and vary dramatically as insurers seek to differentiate themselves from their competition. They also change regularly as the threats evolve.

“2016 is the year of ransomware and cyberextortion,” Vernaci said, referring to a hack in which cybercriminals freeze a company’s online systems and demand payment to unfreeze them. In a recent example, the Los Angeles County Department of Health Services lost control of its computers in a ransomware attack, the Los Angeles Times reported. The county did not pay the ransom demanded.

Vernaci said he has seen a large law firm subject to this type of attack recently, though he declined to name the firm. He emphasized that many industries are being targeted, not just law firms or health care providers.

Just as policies vary dramatically, so do their prices, Ricketts said. But he offered what he called “a very, very loose rule of thumb”: A policy should cost $10,000 to $15,000 for each $1 million of limit. In other worlds, a firm can expect to pay between $20,000 and $30,000 per year for a cyber policy that will cover up to $2 million in expenses.

Read full article

How should an attorney should handle a mistake.

Although there are steps that attorneys can take to reduce the likelihood of making an error, mistakes still happen in the course of an attorney-client relationship.

Involve the legal malpractice insurance company.

Many attorneys believe that it is better to wait for the claim (typically defined as a "written demand for money or damages") or a lawsuit before involving their legal malpractice insurer. In reality, the risks of waiting far exceed any perceived advantages.

Yes, most legal malpractice policies are "claims made" or "claims made and reported" policies. This means that the policy covers claims against lawyers that are made (and if required, reported to the insurance company) during the policy period. The important date is when the claim is made. This is the latest time when a claim must be reported to the insurance company.

On the other hand, most policies also permit a potential claim to be reported as soon as the lawyer learns about any basis upon which a claim could be made, including a simple mistake. In legal malpractice nomenclature, such a report is called a "notice of a circumstance." By giving notice of a circumstance, a lawyer assures coverage in the event a subsequent claim results, regardless of when the claim is finally made or the lawsuit is filed.

Also, by giving the notice of circumstance, attorneys can avoid some tricky issues in the renewal process for their malpractice insurance. Many applications ask if any attorney applying for insurance is aware of a circumstance that might give rise to a claim. Attorneys who have not already reported the circumstance then face the obligation to do so in response the question. The failure to report a potential claim in an application for coverage or renewal can put coverage for the entire firm at risk.

Once the malpractice insurer is involved, the better approach is to provide the client with the contact information for the professional liability insurance carrier. Basically, get out of the middle.

Shea Barclay Group Proudly Sponsoring Gasparilla Music Festival March 12-13, 2016

FEEL GOOD MUSIC

Gasparilla Music Festival 2016

Erykah Badu, Stephen "Ragga" Marley, Greensky Bluegrass, Ms Mr, Houndmouth, Charles Bradley and His Extraordinaires, Talib Kweli, Savoy, Antibalas, Carlos Varela, Blitzen Trapper, Kermit Ruffins & The Barbecue Swingers, David Wax Museum, Andrew & Polly, The Whiskey Gentry, Sweet Crude, Gumbi Ortiz & New Groove City!, The New Breed Brass Band, Damon Fowler, Fruition, Gwan Massive, Resinated, DieAlps!, Serotonic, The Woolly Bushmen, Poetry n' Lotion, Ries Brothers, Samuri Shotgun, Jackson Davis & The Jackettes, Gritt, Mr Tommy, Mt Zion Gospel Choir, Lucero, The New Deal

Make plans to attend free kickoff and after parties at the Seminole Hard Rock Hotel & Casino and Channelside Bay Plaza, respectively. Don't forget to tell your friends to grab their advance tickets before they sell out.

Saturday Mar 12, 2016 – Sunday Mar 13, 2016
Doors: 10:00 AM
Show: 11:00 AM
All Ages
$20 - $150

Tickets for the festival are priced as follows:
2 Day General Admission - $60
Saturday General Admission - $40
Sunday General Admission - $30
Sunday Latin Stage ONLY - $20
2 Day VIP - $150
Saturday VIP - $100
Sunday VIP - $75

Michael Shea - Publix Gasparilla Distance Classic

Michael Shea completed the Publix Gasparilla Distance Classic Marathon this weekend. He finished 4th overall out of 344 finishers. While being a bit sore, he competed and completed the 15K, 5K and 1/2 Marathon.

Stats:
15K-58:55- 52nd Overall
5K-19:45-81st Overall
½ Marathon-1:26:56-64th Overall
Michelob Ultra Amber Challenge-4th Overall (3rd Place Male)

To see more about the Publix Gasparilla Distance Classic, click here.

For more details on the Race results, click here.

National Mortgage Servicing Conference & Expo

Shea Barclay will be attending the Mortgage Bankers Association [MBA] meeting and USFN in Orlando on February 16-18th. Both Shea & I will attend the meeting to support our multiple USFN clients and other default law firms present.

For more information: Click Here.

Sandy Garrick - Participating in 5K Run on 1/24/16

Sandy Garrick:
Pet Rescue by Judy – Participating in 5K run on 1/24/16
For more information go to: Pet Rescue By Judy's Facebook Page

Facing The Risk

Facing The Risk

Author: Mike Shea, President, Shea Barclay Group

As the economy becomes more and more tumultuous, law firms continue to face higher risks and tougher business decisions. Account receivables are on the rise, collection timelines are lengthening beyond 90 days, clients are stretched thinner and thinner, while at the same time firms are doing everything they can to keep business coming in the door and keep everyone on the payroll. These are some of the most difficult times law firms have faced in history. These are the times when risk management becomes even more important because behind every good client is somebody looking to capitalize and receive financial gain by any means possible.

Here are some simple tips to consider when evaluating your firm’s risk management practice and procedures. Following these procedures does not prevent malpractice claims, but certainly can be used as a guide to educate you on why malpractice insurance carriers ask certain questions. These tools may also help you to indentify practices and procedures to help minimize the threat of a legal malpractice action. These practices become even more important during these difficult times we are currently facing. Now, more than ever, is the time to pay attention to all aspects of your law firm to make sure corners are not being cut and carefully putting quality in front of quantity. Starting with the basics, make sure to have a quality intake form that covers everything ranging from billing and fee arrangements to critical statutes or other time sensitive deadlines. You will want this form to clearly spell out the scope of service(s) and most importantly address any conflicts of interest and attorney/client privilege issues. Knowing how to check for and indentify conflicts or potential conflicts is essential in avoiding a legal malpractice matter. A good client intake form is an excellent first step!

Something that is most important during these tough economic times and relating to my previous comments is accepting clients and/or cases. Here are a few things to consider before engaging with any new client or taking on a new case. First and foremost, beware of clients who are changing attorneys or have unreasonable expectations. Trust your instincts, if you impression of the client or the case is unfavorable then more than likely you are correct. ALWAYS decline any representation in writing. Be sure to avoid giving any recommendations or opinions on the case and include any statute of limitation dates if applicable. We have seen it time and time again when a client brings a suit against a firm because they believed they were representing them. The last thing you want is to be set up by a potential client relating to a case you never accepted in the first place.

How is your docket and case management system? There are many technologically advanced programs available these days that range in all sorts of capability and affordability. I can assure you that this is vital for maintaining control of your practice. Timely and accurate communication with your client is a key component to case management as well. Here are a few procedures to consider implementing if you have not already done so and if you have now is a good time to review everything. Make sure to have a computerized docket system with a minimum of one paper backup system. It is also recommended to have offsite storage of backup information. Another good practice is to have calendars cross-checked by more than one individual. We all know that sometimes another set of eyes will pick up on something others may not. It is also critical to have a quality training program for your staff on the proper use and management of all office procedures. Studies have shown that the highest percentage of malpractice suits originate from some sort of administrative error. This is something that can be easily prevented with the proper systems and procedures in place.

Lastly, I want to touch on a very common practice especially during tougher economic times such as the ones we have been faced with recently. I am referring to suing your clients for unpaid legal fees. This can be very detrimental for a number of reasons, but most importantly because it sets the table for a cross-complaint for legal malpractice. Just below administrative errors, statistics have shown that the second most common malpractice suit is the direct result of a counter complaint resulting from an attorney suing a client for unpaid legal fees. This gives you an idea of why all insurance carriers look at this as a key underwriting question. If this is common practice in your firm it can surely have a negative impact on your premium as well as affect your insurability. Trust me, I understand that sometimes it cannot be avoided, but here are a few things to consider before going down that road. Take into consideration the cost of litigation and the time involved. Make sure to consider the possibility of a malpractice countersuit. Also, consider the factors in collecting the judgment. As a preventative measure some firms utilize a procedure of collecting higher retainers, or a series of follow up letters with periodic billing. Some will use a collection agency to pursue the matter before filing suit. A final step, assuming you meet all ethical obligations, is simply withdrawing from representation.

There is no doubt as a part of human nature that we are all prone to mistakes from time to time during our professional careers. Some of these can be prevented and some simply cannot. I hope you will consider this information as a valuable tool to improving your practice and maybe helping prevent a simple mistake. You may just alleviate the burden of a malpractice suit walking in the door. I am hopeful this will also provide some insight into the questioning on malpractice insurance applications. There is no doubt that times have been tough for law firms over the past few years, but that does not change the risks associated with your practice. It actually magnifies these risks. Although now may be a time when you need to scale back certain things, make sure you keep all these things in mind as you do so because risk management is more important to your practice than it has ever been.

Author: Mike Shea, Thaxton Barclay Group, 100 N Tampa St. Suite 3530, Tampa, FL 33602. Thaxton Barclay Group specializes in the evaluation, assessment and placement of professional liability insurance and risk management for law firms.