3 troublesome risk management trends impacting LPL insurance

Everyone makes mistakes—including the most diligent legal professionals. But even if you’ve performed your duties properly, an unfounded malpractice claim from a disgruntled client could instantly derail your practice and ruin your reputation. That’s why legal professionals need lawyers professional liability (LPL) insurance to protect against claims of alleged negligence, malpractice, and errors and omissions.

Certain situations can leave lawyers vulnerable to these risks—making LPL coverage even more essential while necessitating other steps to protect your firm. We’ll explore three of these troublesome trends below and offer solutions to help lawyers mitigate these risks.

Problem #1: Risk fatigue

As the demands for risk management and regulatory compliance increase, the added pressure on lawyers can cause a sense of “risk fatigue.” Combine this fatigue with rising revenue targets and client service expectations, and this pressure can exacerbate poorly executed risk management practices, leading to potential liability issues later on.

Solution: Embrace automation

One way to prevent LPL insurance issues related to risk fatigue is by automating extraneous compliance tasks. Studies from McKinsey Global Institute suggest that automation can free up to 25% of a lawyer’s workload. Meanwhile, Gartner estimates that technology will demand 12% of legal budgets by 2025, compared to barely 4% last year—illustrating the budding potential for automation tech to help mitigate risk fatigue.

Problem #2: Skills gap

The responsibilities involved in legal risk management are too complex for any legal team to handle alone. To develop a more mature risk management posture, organizations should take a multidisciplinary approach to incorporate the skills and insights of various experts, such as:

  • C-level executives like a legal chief operating officer.
  • Legal project management specialists.
  • Risk management experts who advise risk strategies on a case-by-case basis.
  • Technologists who can recommend and implement risk management software while identifying new risks associated with emerging technologies.

Solution: Outsource compliance

By outsourcing risk management and regulatory compliance to a specialized firm, legal practices can access more advanced risk management programs and compliance capabilities than they may be able to muster in-house. Off-loading these regulatory responsibilities to a team of specialists can free lawyers to invest more of their time providing valuable client services—improving profit margins without the distractions of meeting compliance requirements.

Problem #3: Cybercrime

With data centers full of confidential corporate details and sensitive personal information, law firms make attractive targets for sophisticated hackers. In the event of a data breach or other cybercrime, unprotected firms could suffer enormous financial and reputational damages.

A survey by the American Bar Association (ABA) revealed that 29% of firms experienced a security breach last year, while an alarming 21% weren’t even sure whether or not a breach occurred. These stats raise serious concerns about the average law firm’s cybersecurity stance, especially in this increasingly digital age. Protecting private legal data is more important than ever before, and as such, it demands a multifaceted approach.

Read more: Client Confidentiality While Working Remotely

Solution: Implement strict security protocols

While law firms are increasing their cybersecurity investments, most of them still aren’t implementing the top-weighted protocols to protect their lawyers and clients. For example, according to Logicforce’s most recent Law Firm Cybersecurity Scorecard:

  • Only 47% use multi-factor authentication.
  • Only 37% use third-party risk assessments.
  • Only 34% employ a specialized security executive.
  • 45% do not have formal cybersecurity policies at all.

Solution: Inquire about cybersecurity insurance

According to the Law Firm Cybersecurity Scorecard, 36% of firms lack cybersecurity insurance coverage. Traditional LPL insurance policies weren’t designed to cover emerging risks like cybercrime, so adding cybersecurity insurance provides a necessary buffer against the exorbitant costs of a data breach. Once you add up the legal fees that might result from lawsuits surrounding a data breach, you’ll start to understand the value of this coverage.

LPL insurance protects against these problems

In addition to the solutions suggested above, LPL insurance coverage can help mitigate the risks of compliance-related lawsuits that may stem from these three troublesome trends. Talk to your insurer about getting coverage specifically designed to protect legal professionals against negligence, errors and omissions, and these other emerging risk exposures.

To learn more about LPL insurance coverage, contact the experts at McGowan Program Administrators or click below for a free online quote.

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