Does Your Law Firm’s Insurance Cover a Cyber Attack?

Many law firms assume their insurance policies fully protect them from the financial fallout of a cyber-attack. Unfortunately, most firms discover the truth after an incident—and by then, the damage is done. Rising cybercrime, increasingly sophisticated attacks, and stricter regulatory expectations have made traditional policies insufficient on their own. Even legal malpractice policies often exclude cybersecurity-related losses unless the firm meets requirements.

The legal sector is now one of the top targets for cybercriminals. With firms routinely handling confidential client information, settlement details, financial records, intellectual property, and sensitive internal communications, a single breach can lead to client loss, reputational damage, and significant regulatory penalties. A strong cyber insurance policy is not optional, it's essential.

But here's the real question: Is your firm truly confident in your coverage? Knowing your policy would pay out if an attack occurred tomorrow can ease your concerns and reinforce your security approach.

This guide breaks down what law firms need to know about cyber insurance, how insurers evaluate your IT environment, and the gaps that commonly leave firms exposed.

Why Cyber Insurance Matters More for Law Firms

Law firms have become prime targets for cybercriminals, not because their systems are weak, but because their data is valuable. Attorneys routinely manage:

• Highly sensitive client records
• Confidential case details
• Financial and banking information
• Intellectual property and trade secrets
• Court filings and documents containing personal data

This treasure trove makes law firms ideal candidates for ransomware, business email compromise (BEC), phishing, and targeted data theft.

Traditional legal malpractice insurance cyber risk coverage was never designed to cover these evolving threats. Even when partial coverage exists, it's often capped, limited, or conditional.

The Hidden Assumption: "My Malpractice Insurance Covers This."

Many firms rely on their malpractice insurance policy to protect them in the event of a cyberattack. The problem? Malpractice insurance generally focuses on professional errors, not cyber incidents.

Most policies:

• Do not cover ransomware payments
• Do not cover IT forensics
• Do not cover incident response or data restoration
• Restrict coverage if the firm's IT environment doesn't meet modern security requirements

A malpractice policy may cover a claim if a breach leads to client damages, but only after the cyber incident—and only under certain conditions. It will not help the firm recover quickly, restore critical systems, or prevent downtime.

That's the job of cyber insurance, and even then, insurers have become far more selective.

Insurers Are Tightening Requirements for Cyber Coverage

Over the last five years, insurers have dramatically increased their underwriting requirements due to the surge in ransomware claims across professional services, especially law firms.

To qualify for cyber insurance (or avoid exclusions), insurers now expect firms to maintain a strong baseline of IT security and compliance. This is where many applications fall apart.

Carriers increasingly require:

• Multifactor authentication (MFA) across all accounts
• Encrypted backups protected from ransomware
• Documented security policies
• Regular vulnerability patching
• Endpoint detection and response (EDR)
• Staff cybersecurity training
• Incident response planning
• Vendor risk management

If your firm cannot demonstrate the above, you may face:

• Higher premiums
• Reduced coverage
• Limited payouts
• Full denial of claims

In other words, insurance companies now expect law firms to operate at a higher cybersecurity standard—and they will verify it.

The Most Common Gaps That Leave Law Firms Exposed

Even firms confident in their protection often overlook critical gaps such as social engineering, ransomware response, and third-party liability, which can leave them exposed.

Social Engineering and Business Email Compromise (BEC)

BEC is now the #1 cyber threat for firms. Yet many policies exclude or severely limit coverage for:

• Wire fraud
• Phishing-based transfers
• Invoice manipulation
• Client impersonation attacks

Given how often law firms handle settlement funds and escrow-related transactions, this gap can be catastrophic.

Ransomware Response and Data Recovery

Some policies cover ransom payments—but not the cost of:

• Decrypting data
• Forensic investigation
• Restoring backups
• Rebuilding systems

Ransomware recovery often costs more than the ransom itself.

Downtime and Business Interruption

If your systems go offline for 48 hours, could your firm continue operating?

Coverage for business interruption varies widely. Some policies only pay out if downtime lasts more than 72 hours—too long for most firms.

Third-Party Liability

If clients sue your firm after a breach, are you covered? Some policies treat client data exposure as a separate category, requiring additional riders.

Data Loss From Human Error

Not all data loss stems from cybercrime. Accidental deletions, misconfigured systems, or software failures may not be covered.

A specialized IT compliance cyber coverage review is the only way to understand exactly where your gaps lie.

What Insurers Look For in Your IT Environment

Insurers have one primary question: How well does your firm reduce cyber risk?

Their evaluation is no longer limited to a questionnaire. Many carriers now require verified documentation or technical audits.

A strong cyber insurance application will demonstrate:

Proactive Cybersecurity Practices

Carriers want proof that you prevent problems before they occur—patching, monitoring, and threat detection must be consistent.

Encrypted, Offsite, Immutable Backups

Backups must be isolated from the primary network to prevent ransomware from encrypting them.

Access Controls and MFA Everywhere

Especially for:

• Email accounts
• Remote connections
• Cloud-based legal applications

Staff Training and Human-Centric Security

Human error remains the most significant risk. Insurers reward firms that implement routine employee training and simulated phishing.

Compliance-Ready Documentation

Insurers want to see policies for:

• Acceptable use
• Data retention
• Incident response
• Password management
• Remote work security

This documentation aligns your firm with industry expectations and reduces the likelihood of denied claims.

How a Specialized Legal IT Partner Helps You Secure—and Maintain—Coverage

A generic IT provider may help you submit insurance paperwork. Still, a specialized MSP for law firms ensures your systems meet insurer expectations.

A partner with legal expertise can:

• Prepare your systems for cyber insurance audits
• Document compliance controls
• Implement mandatory protections like MFA and EDR
• Build secure document workflows
• Protect confidential client information
• Reduce your overall cyber risk profile

More importantly, a specialized partner prevents the gaps that lead to denied claims or nonrenewal.

At Microtech, we work proactively with firms to ensure their environment meets the evolving standards of insurers, regulators, and clients. Our human-centric, collaborative approach means we walk your team through every step of compliance and security—without jargon or confusion.

A Cyber Insurance Policy Is Only as Good as Your IT Foundation

If your security posture doesn't meet insurer requirements, the policy you're paying for may not protect you when you need it most.

A strong cyber insurance strategy requires:

1. The right policy
2. The right coverage
3. The right IT partner ensures everything works as intended

Cyber insurance is not a substitute for cybersecurity—and cybersecurity is not a substitute for cyber insurance. Your firm needs both to function together.

If you want a clear, comprehensive review of your firm's coverage readiness, Microtech can help you identify gaps, build stronger protection, and align your systems with what insurers—and your clients—expect.

Click Here or give us a call at 954-327-1001 to Book a FREE Consult

Frequently Asked Questions

Does legal malpractice insurance cover cyber attacks?
In most cases, it only covers client damages—not the cost of recovery, ransomware, forensics, or downtime.

What cybersecurity controls do insurers require from law firms?
Most carriers expect MFA, encrypted backups, endpoint protection, patching, and precise documentation of IT policies.

Why are law firms targeted by cybercriminals?
They store highly valuable client information and financial data, making them prime targets for ransomware and phishing attacks.

Can weak IT security void my cyber insurance claim?
Yes. If your firm fails to meet the security requirements outlined in your policy, your claim may be denied.

How often should a law firm review its cyber insurance?
Annually—or whenever central system, staffing, or workflow changes occur.