X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

Lawyers have been quick to grasp the opportunities created by the web, and not just in terms of advising clients on internet legal matters. Legal practices and commercial firms of all sizes have their own websites. However, as legal services begin to be sold over the web and sites become more than shop windows, firms must check whether their professional indemnity insurance or specialist ‘cyberliability’ insurance protects them against potential internet infringements.For law firms in the vanguard of e-commerce that have created ‘virtual practices’, even more care needs to be taken. Confidentiality is of particular concern; information that gets posted on sites is available to huge numbers of people.Secondly, general information that is specifically relied on and not accompanied by sufficient caveats and disclaimers could open up a negligence minefield. Lawyers will rightly be asking why information posted on sites or as e-mails is any different from advice traditionally given in old-fashioned letters or over the ‘phone.From 1 September, following the end of SIF, lawyers must have secured at least £1m of professional indemnity insurance. They can obtain it from various commercial insurers and it is possible that they may each apply a different definition of ‘civil liability in the course of private legal practice’ regarding information on the internet. Law firms trading as ‘virtual practices’ need to seek clear confirmation from their insurers that potential liabilities will be covered. Otherwise, expensive claims may result in a large threat to business.Even greater risk comes from e-mails sent to clients, third parties or other members of staff. Firms are strongly recommended to police adequate employee/partner e-mail protocols that will prevent accidental infringements. Certain businesses have already learned expensive lessons after being sued for defamation because of inappropriate employee e-mails. And it is not just the cost in terms of damages awarded, the far greater cost is damage to the businesses’ reputations.Insurers may dispute a claim arising from an employee using their firm’s e-mail. They might argue that it is not something they will cover because the subject matter of activity described in the e-mail is considered to fall outside of the definition of ‘private legal practice’. The advice again, is to check the terms of the cover.Another issue relates to potential fraud by the firm or employees as a result of billing and collection of monies by way of e-commerce transactions. Credit card fraud is a potential worry, particularly if a third-party hacker is able to extract a client’s card details from a law firm’s database. Insurers consider the risk of e-commerce credit card fraud as being of such concern that few are prepared to provide any meaningful cover.Some insurers will offer cover in relation to negligent computer virus transmissions by the insured. For the sake of clarity, they are proposing a cyberliability extension to the Law Society’s mandatory wording indemnity insurance. The extension also specifies that it will provide cover for inadvertent infringement of any intellectual property rights, breach of confidence or infringement of rights of privacy, and misuse of confidential information and breach of data protection legislation. The issue of e-mail and internet defamation is also covered under this extension.Although such extensions may be considered cosmetic, it has to be good to have the terms for such cover clearly stated in policies. Otherwise, these risks tend to be interpreted within the term ‘civil liability in course of private legal practice’, which is open to debate.Where cyberliability insurance clearly provides additional cover to that found under a Solicitors’ Professional Indemnity Policy is first-party losses. It will cover ‘cyber vandalism’ – the deliberate corruption of a website and extortion or threat by a hacker of the firm’s site by way of damage, destruction or alteration where such targeted acts against the firm result in direct financial loss, including the costs of repairing damage.

This premium content is reserved for
Legal Week Subscribers.
Subscribe today and get 10% off.

A PREMIUM SUBSCRIPTION PROVIDES:

  • Trusted insight, news and analysis from the UK and across the globe
  • Connections to senior business lawyers within the leading law firms and legal departments
  • Unique access to ALM's unrivalled, market-leading reporting in the US and Asia and cutting-edge research, including Legal Week's UK Top 50 and Global 100 rankings
  • The Legal Week Daily News Alert, Editor's Highlights, and Breaking News digital newsletters and more, plus a choice of over 70 ALM newsletters
  • Optimized access on all of your devices: desktop, tablet and mobile
  • Complete access to the site's full archive of more than 56,000 articles

Already have an account?

For enterprise-wide or corporate enquiries, please contact Paul Reeves on Preeves@alm.com or call on +44 (0) 203 875 0651

 

Legal Week Newsletters & Alerts

Sign Up Today and Never Miss Another Story.

As part of your subscription, you can sign up for an unlimited number of a wide range of complimentary newsletters and alerts. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2018 ALM Media Properties, LLC. All Rights Reserved.