Effects of COVID-19 on Insurance for Lawyers
While the COVID-19 virus continues to spread and the world attempts to prevent economic devastation, law firms fight against an increasing number of challenges. As your trusted advisor, Lawyers Choice works to stay on top of the everchanging industry, securing the most comprehensive policies for the lowest possible premium to ensure your firm is always protected.
Some of the hidden symptoms of the Corona Virus pandemic include an escalation in insurance claims, specifically: Employment Practices Liability Insurance (EPLI), Lawyers Professional Liability (LPL) and Cyber Insurance. This increased risk translates into a harder market with heightened premiums, carriers less willing to offer coverages, and more exclusions.
Employment Practices Liability Insurance (EPLI)
In March 2020, law firms were forced to quickly adjust their traditional working protocols to ensure the health and safety of their staff and clients. These rapid and unusual circumstances have increased the likelihood of a potential EPLI claim immensely. Employment Practices Liability Insurance (EPLI) coverage protects an employer in the event of a “wrongful” employment related act (i.e. termination, discrimination, harassment, negligence, and employee privacy rights claims). In light of COVID-19, new potential risks include: not implementing adequate workplace policies, failing to provide proper protective equipment, disclosing confidential health information to other employees (this includes COVID-19 results), mishandling paid leave and sick time, as well as wrongful termination, harassment, discrimination and more.
Law firms wonder; Can they insist on their attorneys traveling to affected areas for work? Can employees be fired to refusing? If the virus is contracted at work or in court, would that be considered a workplace injury?
Often, EPLI policies exclude coverage for bodily injury, criminal/fraudulent acts, Occupational Safety and Health Act (OHSA), wage and hour (Fair Labor Standards Act – FLSA), and the Family and Medical Leave Act (FMLA). In response to increasing claims due to COVID-19, carriers are limiting wage and hour coverage, narrowing third-party definitions, adding more exclusions, and increasing premiums. While some EPLI policies may provide coverage for various Corona Virus related employment claims, it is essential for firms to review their specific policy and potential risks.
Historically, significant economic downturns are often followed by an increase in the severity and frequency of legal malpractice claims. Considering the court closures, attorneys working from home, and an increase in the number of lawyers dabbling in unfamiliar areas of practice, malpractice claims are expected to continue to rise following this COVID-19 pandemic.
According to a survey conducted by the American Bar Association, missed deadlines represented roughly 30% of legal malpractice claims in 2019. During COVID-19, as many law firm offices and courts closed, several emergency orders were issued which extended multiple deadlines. Now more than ever, attorneys need to ensure they are especially diligent when maintaining their calendars. There should be at least one back-up calendar that is stored off site. A centralized calendar that contains every attorney’s calendar in the firm is highly recommended for any law firm with more than one attorney.
Remote work comes with its own challenges. While many attorneys have managed to maintain their productivity, it has become increasingly difficult for managers to ensure proper procedures and protocols are being followed. Not only is it essential for lawyers to provide a timely and thorough response to their clients, but they also need to ensure all communications and client information remains confidential.
Amidst the communication hurdles during COVID-19, it is more important than ever to ensure clients are prepared for the outcome of their case. Lawyers need to be careful about which clients they choose to represent; as well as maintaining continuous and thorough communication to manage the client expectations. Clients often sue their lawyers for malpractice when they get an outcome they did not expect. Even a frivolous claim can cost the firm tremendously.
As attorneys, your clients trust you with confidential information. Criminals are attracted by confidential information such as financial records, health records, social security numbers, intellectual property, depositions, and criminal records. Loss of such information may result from a malicious attack (e.g., hacking, malware, or deliberate espionage), a dishonest employee, or theft an electronic device. Loss can also result from innocent mistakes such as losing a smartphone, unintended transmissions, or other human error that can occur in any busy practice.
Typically, Cyber Insurance covers losses due to damage, theft, disruption, or corruption of electronic data. As the Corona Virus outbreak has resulted in more people working from home than ever before, cyber criminals are taking advantage of the surge in remote connections, and lack of security to a level never experienced before. Claims under cyber policies are on the rise. To prevent an unauthorized user, technical expertise, resources, and security protocols need to be put in place and followed by everyone in the firm. While it is impossible to completely prevent a cyber-attack, the risk of entry can be minimized, and restorative services can be set into place.
Underwriters are constricting as privacy issues and compliance concerns increase. Some carriers are restricting certain coverages or introducing exclusions. Others are limiting coverage for employee-owned devices. Overall, just like EPLI and LPL, Cyber coverage has been increasing in premium, and is becoming harder to obtain.
Amongst this unsettling environment of COVID-19, it is so essential for attorneys to safeguard their law firms from employment-related risks, malpractice claims and cyber security threats. At Lawyers Choice, we make sure your firm is covered with customized, comprehensive policies. By helping you understand the insurance market, current trends and coverages available to your firm, we know you will feel confident in your coverages. If you would like us to go through your policy with you in greater detail, call or email us today.