Sidebar: Data breach: 5-point inspection checklist

According to Randal P. Mrozowicz, executive vice president at Monitor Liability Managers LLC, today's era of social media, data breaches and crisis situations requires agents to help law firms recognize these new exposures and offer professional liability insurance that covers these new risks as part of a comprehensive policy. “Now more than ever, law firms of all sizes need the protection that a broad LPL policy can offer,” he said.

To illustrate some of the privacy issues insureds face, consider these examples of recent claims concerning with lawyers' professional liability:

1. A prominent female executive in a metropolitan city filed a personal injury lawsuit against her attorney for invasion of privacy and emotional distress. She alleged that the attorney, a partner at a distinguished law firm, wrongfully filed a sexual harassment lawsuit listing her full name instead of using an alias. She stated that her privacy had been invaded because her well-known name was released to the public and she later suffered public humiliation and scrutiny. Defense costs exceeded $75,000.
2. A state administrator filed suit against an assistant public defender alleging improper disclosure of confidential information. The attorney allegedly discussed his clients' cases, often using extraordinarily personal information, such as their names and jail identification numbers, on his personal blog. The state administrator stated that the attorney's comments were an obvious violation of client confidentiality. The attorney is currently facing censure by the state bar association.

In addressing some of these media and privacy perils, determine if there is coverage in the policy you are providing your law firm client and if not, how can you get them the coverage they need.

Make sure the policy includes:

• Publishing liability coverage for opinions/editorials published directly related to the practice of law
• Network and information security offenses–covering claims from infliction of a computer virus, failure to control access to the insured's computer or network, including confidential information of others
• Expense reimbursement coverage for a crisis event–usually a sub-limit outside the limits for reimbursement of expenses after a crisis event that will help repair any damage to the insured's reputation stemming from the event that occurred. Accomplished by consultation by a public relations firm.

Include these preferred coverage enhancements in your checklist:

• Pre-claim assistancecovers expenses associated with the evaluation and mitigation of potential claims; payment is not subject to a deductible and does not reduce the applicable professional liability coverage limits
• Innocent insured coverage–when several insureds share a policy conduct or knowledge of one insured does not impute the other insureds from coverage and covers the innocent insureds
• Deductible credit for mediation claim settlement
• Worldwide claims coverage
• Any gaps in coverage where bodily injury or property damage is excluded
• Reimbursement coverage for legal expenses or regulatory proceedings
• Broad definition of professional services–includes pro-bono services and in the following capacities: lawyer, law clerk, paralegal, legal support staff, arbitrator or mediator, lobbyist, notary public, title agent and in connection with the practice of law; administrator, conservator, receiver, executor, guardian, trustee.

Also, note in today's market that you are able to purchase coverage for information security and privacy liability on a stand-alone basis should your policy only provide a sub limit, no coverage or your client wishes to keep these exposures separately insured. Many times a stand-alone policy can be more comprehensive in coverage. For instance, Beazley Insurance Co.'s information security and privacy product provides privacy liability, third-party coverage in response to unauthorized access, electronic media liability coverage and first-party coverage for losses from network security breaches, with limits of up to $20 million.

“In preparing proposals for law firms, it is essential that the exposures be evaluated and updated at least annually,” said Peter R. Cohen, vice president of Capacity Coverage Corp. Agency in Mahwah, N.J. “We have found that as exposures evolve, having a wholesaler that specializes in professional lines who can provide us with as many coverage options as possible is essential to addressing the needs of our clients. As a retailer, it isn't always possible to explore every potential carrier alternative.”

If you don't know all the ins and outs of placing lawyers' professional policies, team up with a wholesaler who can guide you and provide carrier access to get the job done correctly. A wholesaler with a dedicated team of professional lines experts can walk you through to the best fit for your client and will know which carrier is providing the best pricing and coverage with current information.

Related: Read another feature by Jennifer Dumont, “Using the wholesaler connection to deliver EPL coverage.”

Sidebar: Data breach: 5-point inspection checklist