Are you covered?

• Author: Jason Tashea
• Pages: 30-32

30 || ABA JOURNAL JUNE 2018

PHOTO ILLUSTRATION BY SARA WADFORD/SHUTTERSTOCK

Business of Law

||

SPECIAL EDITION

ARE YOU COVERED?

CYBER INSURANCE HAS BECOME A MUST-HAVE FOR LAWYERS, BUT THE

STILL-NASCENT MARKET IS HIGHLY UNSTABLE AND LACKS UNIFORMITY

BY JASON TASHEA

With a single click, a law fir m can be brought to its knees.

On May 22, 2015, an employee at Moses Afonso Ryan,

a small business-law fi rm in Providence, Rhode Island,

opened an attach ment in an email from an unknow n source.

Within a short time , every document and device on the

firm’s network was disabled. Ac cess was hidden behind a

wall of encry ption that even hired expert s could not crack.

Thinking it had no ot her options, the firm capitulated to

the perpetrator s of the ransomware attack, went th rough

two rounds of negotiations , and paid two ransoms for a total

of $25,000 in bitcoins to free it s system.

Although not every doc ument was fully recovered, the law

firm was fu nctioning again. But the cost was st eep. Not

only did it lose the ransom money; the at tack also forced

the firm oine for thre e months. Additionally, being

unable to operate during t hat time cost the firm more

than $700,000 in potential i ncome, according to court

documents.

The firm thought it was completely i nsured, thanks to a

property coverage p olicy from Sentinel Insurance Co.

that covered loss of income under cer tain circumsta nces,

including computer fraud. However, the firm got a r ude

awakening when Sentinel paid only $20,000 of the c laim

for damage to the computer sy stem. Sentinel argued that

the loss of income is not insured u nder the property cover-

age because there wa s no “direct physical loss of or physical

damage to proper ty at the ‘scheduled premises.’ ”

As a result, the fi rm sued.

EXPANDING POLICIES

The case langui shed in the U.S. District Cour t for the

District of R hode Island for three years before both sides

came to a settlement in la te April. A representative from

Moses Ryan, the firm’s current na me, confirmed that a deal

had been reached but decl ined to elaborate, citing a con-

fidentiality agr eement. The Hartford Financial S ervices

Group, Sentinel’s parent company, did not respond to

requests for comment.