The survey of 560 law firms is included the Law Society’s annual professional indemnity insurance survey, published yesterday. It found that 22 per cent of law firms had been targeted by scammers in the last year, with money being successfully stolen in 8 per cent of these incidents. In some instances, partners were required to make up the deficit of cash lost to scammers, while banks and insurers made up for some or all of the loss in other cases. ‘In the worst case scenario, a scam can result in a firm having to close and partner bankruptcy, if the firm cannot meet its regulatory obligation to make good the client account within a short period of time,’ the report warns.

Insurance premiums affected

The society also reported that there were ‘isolated incidences’ when in the wake of a successful scam, insurers increased a firm’s premium on renewal and the cost of its run-off cover. ‘There are also indications that some insurers, when setting premiums at renewal, will now ask firms what preventative measures they have taken to protect against criminals targeting client accounts. Including what security and IT systems they have in place,’ says the report.

Source: Legal Futures