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For educational use. The Bugs Not Gone Yet Lawyers Expect More Y2K-Related Lawsuits

L O N D O N, Jan. 21  It aint over till the fat lady sues. That is the message that greets visitors to the Web page of Ross & Co, a law practice in South Wirral, northwest England, that specializes in millennium computer bug law suits. Its is a reminder to those who believe that the lack of mayhem caused by the millennium computer bug over the New Years holiday proves it was a nonevent. Stories about the death of the millennium bug have been exaggerated, said Mark OConor, a lawyer with Bird & Bird. Lawsuits for hundreds of millions of dollars are in the pipeline, seeking damages for a range of problems. Some firms allege overcharging by information technology consultants or accuse consultants of recommending work that was unnecessary. Others may seek to recover huge sums spent on new computers because they were persuaded that unless they were installed, the business might disappear into a cyberspace black hole. Firms also expect lawsuits from shareholder groups who wonder why U.S. and British companies spent vast amounts to insure their equipment against the bug while state-owned enterprises in countries such as South Korea and Italy, with similar equipment, spent nothing and had no problems. The lack of spectacular examples of millennium bug problems did not surprise experts such as the Gartner Group, a U.S. information technology research company. It said such predictions showed a lack of understanding of the nature of the bug, which resulted from some computers programmed with abbreviated years like 99 tripping over the zeros in 2000 and crashing or spewing out erroneous data. Gartner, which reckoned that the global cost of repairing the bug would be between $300 billion and $600 billion, said less than 10 percent of the problems would occur during the two weeks around Jan. 1, 2000, while 55 percent would hit over the rest of the year. Any problems would be a result of computer systems being gradually degraded, like sand in an engine. Its too early to say what (legal action) might come out of the woodwork, said Alistair Maughan, a London partner with law firm Shaw Pittman of Washington, D.C. Grounds for Legal Attack Graham Ross, a partner at Ross & Co., said companies that were persuaded to repair software or buy new computers to avoid being hit by the bug might sue, alleging that the original equipment should have withstood the changeover to 2000. Others might seek to invoke the Sue and Labor principle, which originated in marine insurance and covered a shipping company that was forced to take emergency action against an imminent threat, which, if not taken, would sink the vessel. The expense of purchasing new computers or expensive advice to avoid the millennium bug could in theory be charged to insurance on these grounds, Ross said. Smooth-talking salesmen might have persuaded companies to make unnecessary purchases. You might have been advised to buy new PCs when all that was needed was a simple bios (internal clock) fix. If the company was motivated by a plan to sell more computers rather than just fixing the problem, if you spent money unnecessarily you might have a claim, Ross said. Shareholders may also be wondering if huge sums spent to stop the bug might mean company directors have breached fiduciary obligations. Ross Anderson of Cambridge Universitys Computer Laboratory says British Telecommunications and South Korea bought similar telephone hardware in the late 1980s. In mid-1998, Anderson said BT would spend around $800 million to make sure it was not destroyed by the millennium bug. South Korea up to that point had spent nothing because it did not see a problem. They cant both be right, Anderson said at the time. In the event, no big problems were reported by BT or South Korea. BT shareholders may demand convincing reasons for spending on this scale and could seek compensation from directors if huge sums were judged to have been spent unnecessarily.

Allegations Difficult to Prove But most company directors and consultants can breathe easy, Julian Stait, a partner at Dibb, Lupton Alsop, said. It would be extremely difficult to prove a case against consultants. How would you show that they actively misled or fraudulently convinced a company to spend money? asked Stait, the firms lead technology lawyer. It would be tough to prove that company directors were to blame for excess spending, he said. You would have to show a breach of duty of care and that huge sums were spent when they did not need to. The fact that they spent lots of money and then had no problems might show completely the opposite, might show they spent the money well. Last year, when some commentators still worried about some kind of millennium meltdown, estimates from the United States reckoned that litigation induced by millennium bug failures could lead to claims of up to $1 trillion. So will there still be a wave of law suits, or just a trickle? Somewhere in between, Stait said. There were lots of disputes in the U.K. last year; a couple went to mediation. One was worth about 200 million pounds ($330 million) and one or two still remain to be resolved.

Windowing Safe Until 2020 Some Y2K experts still believe there are more dates that could trigger computer failure. There is Feb. 29, 2000, which may not appear on some calendars because of a complicated formula in which years marking the start of a century are leap years only once every 400 years. Then there is Oct. 10, 2000, the first date in 2000 with eight digits. A few die-hards expect trouble then. A long-range trigger date that might well be forgotten when it arrives is the year 2020. It is a theoretical problem because of the windowing technique often used to cure software from millennium bug attack. Windowing, which has no connection with software giant Microsofts Windows products, was a cheap way to fix the problem that kept old software but ordered computers to add 19 before numbers of 20 or more, so 94 became 1994, while numbers less than 20 would be allocated a 20, as in 2005. Unfortunately, this means 2020 would become 1920. Were companies told that this method was used? asked Ross. If a supplier says hes given you a compliant system but used the Windowing technique you still havent been supplied with proper software, but youve got 20 years to do it.

-- Martin Thompson (, January 21, 2000


Martin, this article foretells interesting years ahead for the courts! America could very well have a wave of Y2k lawsuits coming, not a trickle.

Speaking of litigation, how about the man who just patented the "windowing" Y2k-fix technique? He could end up more wealthy than Donald Trump if he sues every company and corporation that used the fix. I predict he gets all or nothing. What a safe bet.

-- Lee Maloney (, January 26, 2000.

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