Owning or running a law firm is no easy task. There are virtually dozens of difficult decisions to be made on a daily basis. Overseeing your attorneys, staff, and making sure your clients are happy are just some of the daily difficulties that goes along with running a successful law firm. Often those in charge of a law firm do not consider or do not have the time to consider all the risks and exposures associated with operating a business. That’s where having a specialty insurance broker dedicated to law firms can pay dividends.
Many managing partners, firm administrators or office managers think legal malpractice insurance is the only exposure they will need to cover. Unfortunately, the exposures to your law firm do not stop with covering only professional services. While having a professional liability insurance policy is absolutely necessary to protecting your law firm, this is often the most obvious risk. There are several other types of insurance coverage that should be discussed and purchased when owning a law firm. Let’s take a look at some of the other types of insurance and why you should purchase these coverages:
General Liability Insurance
General liability for a law firm is important because it covers most general lawsuits. This includes premises liability if anyone is injured while on your business property, and completed operations for any special services you provide, aside from your main legal assistance. Premises liability is most important, as a client could slip on your property, get injured from a falling file cabinet or trip over a stack of books left in a client consultation room.
Business Property Insurance
Business property insurance provides coverage for your law firm property or office. If an unexpected event like a natural disaster, fire or flood occurs, it could destroy your property and anything inside, including files, books and electronic equipment. Business property insurance helps you replace what was ruined and make necessary repairs. Flood is now excluded from most business owners’ policies, so flood insurance should absolutely be considered as an additional coverage to purchase. Businesses can buy flood insurance through the National Flood Insurance Program, as well as other private insurance carriers.
Cyber Liability Insurance
Cyber liability insurance offers protections from first-party and third-party intrusions or data security breaches into your technology systems. Not all data breaches are caused purposefully by hackers or malevolent individuals; some are caused by individual carelessness, such as leaving an unsecured laptop somewhere and exposing the data to an unsecured environment. Law firms provide a “back door” for a treasure trove of cherished electronic material for cyber criminals eager to gain an edge in the stock market or capture a particularly sensitive batch of data to sell or ransom, including:
- Secret and sensitive information about corporate client’s finances;
- Documents relating to confidential corporate deals;
- Valuable information relating to patented, original and invaluable intellectual property and trade secrets;
- Key evidence pertaining to bet-the-company litigation; and
- Gigabytes (perhaps even terabytes) of emails involving the most intimate, delicate and private details of their client’s personal and professional lives.
Cyber-attacks can be extraordinarily complicated and, once identified, demand a host of costly responses. These include digital forensic preservation and investigation, notification of a broad range of third parties and other constituencies, fulfillment of a confusing constellation of state and federal compliance obligations, potential litigation, engagement with law enforcement, the provision of credit monitoring, crisis management, a communications plan – and the list goes on. During the aftermath of a data breach, a law firm’s notification responsibilities alone involve a lengthy list of relevant constituencies, including clients, vendors, joint ventures, employees, affiliates, insurance carriers and a range of other interested parties.
Employment Practices Liability Insurance
Employment practices liability Insurance policies cover wrongful termination, sexual harassment and discrimination claims that allege differential treatment based on a plaintiff’s membership in a protected class. Discrimination claims can arise under Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, state human rights laws, the Older Workers Benefit Protection Act, the Uniformed Services Employment and Reemployment Rights Act, the Americans with Disabilities Act and the Family Medical Leave Act. Common law tort claims, such as negligent hiring, defamation, and invasion of privacy are usually covered as well.
Commercial Auto Insurance
You probably use your own vehicle often for business purposes, such as driving to the courthouse, law library, meet a client or interview a witness. If you get into an accident on the way to or from any of these destinations, having business auto insurance provides coverage for any property damage or bodily injury caused by the accident. You can also choose to include theft and vandalism coverage in the policy.
Workers’ compensation is required in most states, and provides protection for your lawyers, legal assistants and other employees. If you have an employee that sustains a work-related injury, such as falling on the stairs in the courthouse, that injury is covered by workers’ comp since it is related to their occupation. Workers’ compensation covers all medical costs and treatment options.
One of the biggest risks when it comes to crimes is from dishonest employees, but you also risk office equipment and supplies being stolen, as well as your property being vandalized. Be sure to always run background checks on employees, and get a crime insurance policy just in case they commit a crime against your law business.
Attorney Insure L.L.C.is a specialty, independent insurance brokerage. We are a leading provider of legal malpractice, cyber liability and commercial insurance for the legal community. We often blog, speak and educate on lawyers’ professional liability insurance and other insurance topics related to lawyers and law firms. We are happy to answer and encourage you to ask questions.
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