Insureon Blog

Lawsuits and Workers' Comp and Breaches: Oh My!

19. March 2015 08:05

exasperated judge

This story has it all: lies, scandal, mystery, intrigue. Oh, and data breaches. How could we ever forget data breaches?

But first, let's set the scene. It all went down in Los Angeles, California. According to a report by, two law firms were embroiled in a Workers' Compensation case. For the sake of drama, let's say the two firms spent sleepless nights in front of computer screens, both parties looking for the argument that would bring the case home.

Pressure can bring out the best in us, or it can reveal the depths to which we'll sink to get the job done. And the latter may be true in this instance. Perhaps the partners thought no one would notice they came upon a treasure trove of privileged information.

Whatever the cause, whatever the motivation, the report states one firm allegedly hacked into the other firm's computer network. The result? Knox Ricksen LLP gained access to 2,000 privileged case materials from the other law firm – information that could have given them a real advantage in the case had the judge not questioned where the attorneys got the goods and ordered the documents to be returned.

According to the report, the breached law firm is suing Knox Ricksen LLP over the violation and seeks…

Though you may have no aspirations to be a sneaky hacker mastermind to give your business an edge, there are some lessons to be learned from this convoluted case.

Professional Misconduct: 3 Cautionary Takeaways

Though there are a number of things this lawsuit can teach your business, let's focus on the following three:

  1. Professional errors can come back to haunt you. Sometimes these errors catch up with you almost immediately. Or it may take years for your business to be sued over mistakes – real or alleged – that happened during past projects. That's why it's important to carry Professional Liability Insurance throughout the life of your business – you never know when you might face a lawsuit, and your benefits only kick in when the policy is active. Learn more about that here: "Professional Liability Insurance Basics: Protecting Your Business from High-Dollar Lawsuits."
  2. You can be held responsible for your employee's errors. Let's give Knox Ricksen the benefit of the doubt and say that the leading attorneys on the case didn't know how their colleagues retrieved the private records. But at the end of the day, ignorance isn't an excuse for wrongdoing. Even if your employees made the mistake, your business can be held accountable.
  3. Insurance does not cover intentional wrongdoing or illegal activity. Usually, your liability policies only protect you when mistakes are inadvertently made. For example, most Professional Liability policies won't cover lawsuits over acts of willful negligence. (Learn more about that in "7 Things Professional Liability Insurance Doesn't Cover.") Similarly, your small business insurance policies can't cover criminal cases – liability insurance is designed to cover civil lawsuits.

As a final word of caution, know that lawsuits over professional missteps can be avoided with a little contingency planning, training, and quality control.

For example, ensure your employees understand the industry rules and show them how to operate within those regulations. Though breaking into a competitor's computer network is obviously illegal, there are issues that can be a little more ambiguous. If an employee runs your business's social media account, for instance, they should know about copyright laws and fair use to avoid accidentally committing copyright infringement.

To learn more about preventing different kinds of lawsuits, check out "How & Why to Prevent Malpractice / Professional Liability Lawsuits" and "Social Media Marketing Tips for Small Business: Cut Your Advertising Injury Exposure."


Data Breach | Errors and Omissions Insurance | Lawyers | Professional Liability Insurance | Small Business | Tips for All Small Businesses | Workers' Compensation Insurance

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