The ABA announced last week that it would supplement its insurance coverage offerings to include cyber insurance. Chubb Limited will underwrite the insurance, which the ABA said “includes cyber coverage for a firm’s own expenses, such as network extortion, income loss and forensics, associated with a cyber-incident as well as for liability protection and defense costs.”
In its press release, the ABA referenced the revelations late last year that Chinese citizens had hacked two law firms to obtain information regarding mergers. The hackers then used that insider information to make more than $4 million by trading shares of the target companies.
Firms may also face lawsuits for failure to protect confidential information. For example, a Chicago firm was sued in a class action alleging that a failure to protect client’s confidential information. While traditional insurance policies may cover such a suit, cyber insurance policies are another available form of coverage.
Hackers can also launch ransomware attacks on law firms. Such attacks involve malicious software installed on a computer system. That software encrypts the files on the computer system, making the inaccessible. The hackers then threaten to destroy the files unless a ransom is paid. Again, cyber insurance policies can cover losses arising out of such events.
In sum, law firms are not immune from the cyber risks that face all companies and should consider cyber coverage to supplement other insurance policies that may cover cyber-related losses.