Estimates of the cost of correcting the Year 2000 computer
worldwide range from $300 billion to $600 billion. But that's just
the beginning. Y2K-related lawsuits may well flood the courts, with
a total expense in legal fees that no one seems to have a clue
Legal expense estimates range from $100 billion to a $1 trillion
estimate from Lloyd's of London.
Lawsuits may come from consumers, shareholders or other
businesses. And no one knows for sure how the courts may rule on who
should be held legally responsible for Y2K problems.
"It seems to me one of the key issues being fought over right now
is whether it's the end user of the computer system vs. the vendor
the supplier or the consultant -- whoever put the system in -- or
whether it's insurance litigation -- whether these claims are
under insurance policies," notes Eric Eissenstat, a partner with
experience in computer law at the firm of Fellers, Snider,
Blankenship, Bailey & Tippens.
"Do you have a duty to disclose the fact that your system might
not be Y2K compliant and, if so, when did that duty arise? Because
you've got people who say nobody really knew about it until `96,
`98. And insurance companies are saying it's been a problem since
the early `90s. People have known about it and therefore it's not
At the heart of the issue is the two-digit system used by many
older computers and software programs to denote years. When the year
2000 rolls around, analysts fear such computers will view "00" as
1900 rather than 2000, potentially causing all sorts of havoc.
The starting line for legal action is not at the stroke of
midnight New Year's Eve. Several suits have already been filed,
although Eissenstat says it's hard to estimate how many. In the
middle of January, he heard there had been 40 Y2K-related lawsuits
filed nationwide -- a number he feels is a great underestimate.
The America Bar Association Intellectual Property Committee has
taken the problem seriously enough to arrange a series of roundtable
discussions in cities nationwide. The committee selected Eissenstat
to host the Oklahoma City event last month, which was attended by
about 20 representatives of banks, utilities, government agencies
Eissenstat himself began advising clients in a couple of potential
cases in January. The cases are similar. Both clients have leased
computer systems that are not Y2K ready. The clients wish to get out
of their lease obligations by claiming the companies providing the
computer systems failed to divulge their lack of Y2K-preparedness.
But one case may provide a bit of hope for at least buying time.
A series of suits against Intuit -- the maker of the financial
software Quicken -- have been dismissed.
"Quicken said they were trying to fix the problem and may provide
that fix for free," explains Eissenstat, "and no one knows if
been any quantifiable economic harm to the user of Quicken. So they
said it's too soon. They're going to give Quicken a chance to
Nonetheless, the situation is very serious and the time is short.
Eissenstat's advice is clear: Perform a "legal audit. …