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Legal Outsourcing is a growing trend in the practice of law.  This allows law firms to expand their practice when needed without taking on the fix expenses associated with hiring addition staff.  But Legal Outsourcing does add additional risk and exposures to firms.

Many law firms have client contracts that require the law firm to verify that any outside contractors maintain adequate procedures and insurance.  The insurance can include workers compensation, general liability, professional liability, cyber insurance and theft insurance.  This is especially true of any law firm that has healthcare clients where patient privacy laws and HIPPA regulations come into play.

 

An attorney considering outsourcing needs to consider the following insurance and risk issues:

 

1.       What are the qualifications of the people performing the work, and what screening process did they undergo before being hired?

2.       Do the employees work in an office or from their homes?

3.       Do employees sign confidentiality agreements?

4.       What kind of supervision, review, and quality control is included with the service?

5.       What kind of physical and electronic security is provided for protecting client data from theft or misuse?

6.       Are the computer systems software and virus protection keep up-to-date? 

7.       If remote work is allowed, what addition protections are in place to insure the security of client data?

8.       Does the company have a system for identifying potential conflicts of interest?

9.       Does the outsourcing firm maintain adequate professional liability insurance, i.e. limits, deductible and prior acts?

10.   Are there any limitations on the outsourcing firm’s professional liability insurance that might exclude coverage for the outsourced work?

11.   What is the outsourcing company’s malpractice loss history?

12.   Does the outsourcing firm have proper insurance coverage for cyber liability/data breach

13.   Has the company had any privacy or security breaches in the past, and, if so, what steps were taken to address them?

 

To reduce malpractice insurance premiums we have law firms that want to exclude coverage for outsourced firm’s work, thinking that the outsourced attorney or firm’s malpractice insurance coverage will protect them.  This could lead to a nasty surprise if a claim arises.

Remember that ultimately the work product is the attorney’s responsibility.  If there are any issues or complaints that come out of the outsourced work, the attorney that outsourced the work will be held responsible.  Prior to outsourcing consult with your attorney malpractice insurance provider to insure that the law firm has the proper insurance coverage in place should a complaint or malpractice claim come from the outsourced work.

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