Law firms run on trust. Clients count on their attorneys to keep sensitive information—such as contracts, trade secrets, or personal details—completely confidential. But even in a well-run practice, a small oversight can lead to a breach of confidentiality with serious consequences.
Most lawyers understand their ethical duties, but not everyone realizes how easily a breach can happen—or how damaging it can be. Maybe it’s a misdirected email, a casual conversation in the wrong place, or a staff member accidentally exposing a client file. No matter the intent, the disclosure of confidential information can trigger a loss of trust, reputational damage, or even legal action.
So here’s the question: if something like that happens, is your firm covered?
In this article, we’ll break down what actually counts as a breach, how these breaches occur, and whether your professional liability insurance will step in when it matters most.
What Is a Breach of Confidentiality in Legal Practice?
A breach of confidentiality happens when information meant to stay private—whether it’s about a client’s case, finances, or business dealings—is shared without permission. In legal practice, that can be anything from discussing a case in a public setting to accidentally forwarding an email to the wrong person.
While some breaches are intentional, most are not. More often, they stem from small, everyday mistakes—like failing to lock a file drawer, sending documents to an outdated contact, or not using proper safeguards when working remotely. Even discussing client matters within earshot of others can constitute a breach.
For law firms, confidential information includes a lot more than just what’s said in attorney-client conversations. It also covers contracts, internal emails, intellectual property, trade secrets, personal data, and even medical records in some cases. If a staff member mishandles this kind of material—even by accident—it could be considered a breach.
And because those breaches often feel harmless in the moment, they can easily go unnoticed—until they turn into something much bigger.
How Breaches Occur: Common (and Overlooked) Scenarios
Not every breach makes headlines. In fact, the most common breaches are the ones that seem small—until they aren’t.
Sometimes it’s an email sent to the wrong recipient. Other times, it’s a printed client file left on a shared desk, a conversation overheard by the wrong person, or a staff member accessing private information they weren’t authorized to see.
In a busy firm, these things happen more easily than most attorneys would like to admit.
Technology adds another layer of risk. Remote work, unsecured Wi-Fi, and cloud-based file sharing all increase the chances that sensitive information or personal data could be exposed. A simple lapse in password protection or the failure to encrypt files can leave the door open for accidental leaks—or worse, data breaches.
Even the physical office isn’t always safe. Confidential notes on a conference room whiteboard, unlocked cabinets, or phone calls taken on speaker in a shared space can all lead to the disclosure of confidential information.
In some cases, the information compromised might include medical records, client financials, case strategy, or intellectual property. In others, it might be subject to strict disclosure agreements, making the breach a contractual issue as well as an ethical one.
The common thread? Most of these situations don’t involve bad intent—just busy professionals, real deadlines, and overlooked details.
The Professional Consequences of a Breach
The fallout from a breach of confidentiality isn’t always immediate—but when it hits, it hits hard.
Even if no harm was intended, the loss of trust that follows can be just as damaging as the breach itself. Clients may walk away. Referrals may dry up. And in some cases, a single incident can follow a lawyer or firm for years—especially in a close-knit legal community.
Then there’s the risk of legal action. A client could file a civil lawsuit for damages. You could be reported to the state bar. Or you could be accused of breach of duty, opening the door to a full-blown legal malpractice claim. If the information involved is protected by a disclosure agreement or regulated (like medical records or trade secrets), the stakes are even higher.
It’s also worth remembering that reputational damage isn’t always public—it can happen quietly, in conversations you’re not part of. And that kind of erosion is just as dangerous to a firm’s long-term health.
The bottom line? Whether a breach results in a client confrontation, a lawsuit, or just a lingering sense of uncertainty—it’s a risk no firm can afford to ignore.
Does Insurance Cover A Breach of Confidentiality?
The short answer: it depends.
Most professional liability insurance policies—also known as errors and omissions insurance (E&O)—are designed to protect attorneys from claims related to negligence or mistakes in the course of providing legal services. In many cases, that can include claims resulting from the disclosure of confidential information.
But not all policies are the same.
Some may exclude certain types of data exposure or limit coverage for personal data, medical records, or breaches related to digital storage. Others may only respond if a formal claim is made—leaving you to handle the cost of early legal defense or client remediation on your own.
When You May Need Standalone Cyber Coverage
While professional liability insurance often covers confidentiality breaches arising from legal services, there are gaps that may require a separate cyber liability policy. These include:
- Data breaches caused by cyberattacks (ransomware, hacking, malware)
- System failures or vendor breaches that expose client data
- Regulatory fines and penalties under data protection laws
- Business interruption costs when systems are compromised
- Notification and credit monitoring expenses required by state breach laws
If your firm stores large amounts of personal data, uses cloud-based systems extensively, or handles sensitive information like medical records or financial data, a standalone cyber policy may be essential to fill these coverage gaps.
In addition, if the breach involves a violation of a disclosure agreement, mishandling of intellectual property, or a lapse by a non-lawyer staff member, your coverage could be impacted depending on how your policy is written.
That’s why it’s important to understand how your professional liability insurance coverage actually works—and whether it aligns with the kinds of risks your firm is most likely to face.
If you’re not sure what’s covered (or if your current insurance company doesn’t specialize in law firms), now’s the time to ask questions. Because when sensitive information is involved, guessing isn’t a strategy.
How to Protect Your Firm from Breach-Related Claims
Preventing a breach of confidentiality starts with good habits—but protecting your firm means going further.
First, review your internal protocols. Make sure your staff understands how to handle sensitive information. Password protection, document encryption, and clear guidelines for remote work aren’t just IT best practices—they’re essentials for maintaining confidentiality.
Next, think about your contracts. Do your engagement letters, NDAs, and disclosure agreements clearly outline how client information is disclosed, managed, and protected? If not, this is an opportunity to reduce ambiguity and strengthen expectations on both sides.
Finally—and most importantly—make sure your insurance does what you think it does.
Not all types of business insurance are created equal. General liability insurance won’t help with a breach of confidentiality claim, and cyber insurance alone may not address the legal nuances of a client’s data being exposed.
This is where purchasing professional liability insurance tailored to legal professionals becomes critical.
A well-structured professional liability policy can help cover your legal defense costs, client settlements, and other expenses related to claims arising from a breach. But to get the right fit, you’ll want to work with a provider who understands the legal profession—and how professional liability insurance works in real-world scenarios.
Is Your Firm Protected Where It Matters Most?
Confidentiality isn’t just a professional obligation—it’s the backbone of every client relationship. And when that trust is broken, the damage can ripple far beyond a single case.
Whether it’s the exposure of sensitive information, a simple misstep by a staff member, or a breach tied to a disclosure agreement, your firm needs more than good intentions—it needs the right coverage.
At Kouwenhoven & Associates, we specialize in professional liability insurance for one type of client: law firms. That means we understand the real-world risks your practice faces and how professional liability insurance works in the legal industry.
From claims arising out of breach of duty or loss of trust, to navigating exclusions and fine print and determining whether you need standalone cyber coverage alongside your professional liability policy, we’ll help you get the protection your firm actually needs—not just what a generic insurance company wants to sell.
With access to a wide range of carriers and decades of experience, we can tailor coverage that fits your firm’s size, practice area, and risk profile—whether you’re a solo practitioner or a growing team.
Don’t wait for a breach to test your coverage. Let’s make sure your firm is protected—confidently and completely.
Ready to talk?
Contact Kouwenhoven & Associates today to schedule a policy review.