Millennium Bug a boon for lawyers
By Steve Raabe
Denver Post Business Writer
April 27 - It's been called the Millennium Bug or the Year 2000 problem, Y2K for
short.
Look at the vast legal ramifications of the computer crisis, however, and a new name
comes to mind: the Lawyer's Relief Act of the 21st Century.
Law firms across the country, and throughout metro Denver, are scrambling to set up
practices in what could be the next asbestos, breast implant and Dalkon shield, all rolled
into one large and lucrative liability issue.
"It's a huge new market segment,'' said attorney Steven Segal, a Year 2000 specialist in
the Denver office of LeBoeuf, Lamb, Greene & MacRae. "Nobody knows how big it
could be.''
The problem stems from computers and software that were programmed to use only the
final two digits of a year - "99'' for 1999 - automatically assuming that the first two digits
are "19.''
What happens at 12:01 a.m. on Jan. 1, 2000? Will the computers realize that "00'' is a
new century, or will they be thrust into chaos, believing that the new year is 1900?
Nobody really knows. At the minimum, the bug is likely to create sporadic hiccups that
could inconvenience consumers and businesses. At its worst, Y2K could cripple the
banking sector, health-care systems, pension programs, national defense and anything
else in which computers keep track of the passage of time.
While the scope of the problem remains unclear, there is no ambiguity whatsoever about
the potential for new legal business on a staggering scale.
The cost of reprogramming computers or converting to new systems in the United States
will total anywhere from a low estimate of $115 billion supplied by Framingham, Mass.,
research firm International Data Corp., to a high projection of more than $670 billion,
according to analysts at Software Productivity Research Inc. of Burlington, Mass.
If that seems onerous, consider that the figure represents only the cost of paying
computer consultants to fix systems. The real money is in legal costs - attorney's fees,
court-ordered damage awards and out-of-court settlements.
Legal and liability costs could easily total more than $1 trillion, according to technology
consulting firm Gartner Group in Stamford, Conn.
The enormous financial potential, from a legal perspective, has become apparent now that
client business is building up - a full 20 months before the date changes - and will live on
in litigation for many years after the new millennium.
Almost all major law firms in metro Denver have created Year 2000 practices; many
smaller legal offices also are developing specialties in the issue.
At the Denver firm Hall & Evans, 26 lawyers out of the total staff of 80 already have
been recruited for Year 2000 work.
"We've pulled attorneys from each of our 10 areas of practice,'' said Margaret Reich,
information system manager at Hall & Evans. "As a firm, we look at this issue as
covering a wide area of the law. If we get a Y2K inquiry, we want to analyze it over a
scope of issues, not just say that it's an intellectual property issue or a technology issue.''
The firm's strategy is first to help its clients achieve legal and technical compliance, then
make them aware of problems that could arise from non-compliance on the part of their
consultants, vendors or customers.
Similarly, the Denver office of LeBoeuf, Lamb emphasizes preventive law as a prelude to
creation of defense strategies if clients are sued.
LeBoeuf, based in New York, was one of the first national firms to create a specialty in
Year 2000 law. The Denver office started Y2K work at the beginning of this year with a
team of five attorneys.
"A lot of what we're doing now is preventive lawyering,'' said Segal of LaBoeuf. "We're
trying to identify potential risks, make recommendations about potential exposure, and
work on how to reduce that risk.''
"Along the way, we create a due-diligence record, showing that a company was careful,
followed the industry practices, devoted resources to the problem, and show that they
took the steps to do everything they feasibly could.''
Companies facing potential liability are just one source for business for local law firms.
Another legal specialty is in the general representation of the fast-growing field of
computer-consulting firms that assist companies in Year 2000 compliance.
Denver attorney Les Berkowitz represents Software Migration, a Denver-based
subsidiary of a British company that helps large companies convert old computer code to
Y2K compatibility.
The firm specializes in conversion of a now-archaic computer language that still is used
in the mainframe computers of scores of banks and credit-card firms.
"Here's a firm that is focusing on just one little aspect of (the Y2K problem), yet there's
enough business that they're working on both sides of the Atlantic,'' said Berkowitz,
former chair of the Colorado Bar Association's committee on technology and law.
Berkowitz said he fears that many businesses are not cognizant enough of the serious
legal risks associated with the millennium bug.
"Frankly, I think the public, except for being fascinated by some of the media coverage,
is not viewing this as a risk,'' he said. "To a lot of people, it's nothing more serious than
accommodating a new ZIP code.''
The lack of seriousness may reflect the fact that nationwide, only three Year 2000
lawsuits had been filed through the middle of April.
Two of the suits were class actions brought against two Silicon Valley software vendors.
The actions accuse the firms of unfair business practices for requiring customers to pay
for upgrades that would correct the Y2K problem.
A third suit was filed by a suburban Detroit grocer after its computerized cash-register
system crashed when customers attempted to use credit cards with "00'' expiration dates.
The store sued its computer supplier, Tec-America Corp.
Local legal experts expect the level of public awareness and the pace of litigation to pick
up as the clock ticks closer to 2000.
"We've seen the $1 trillion estimate of costs, and nobody really knows what it will be,''
said Segal of LeBoeuf, Lamb. "But the number is so huge that even if it's just a fraction
of the estimate, it's still a huge number.''
Segal foresees 20 months of intense work preparing his clients, then an unsettling few
hours as 1999 turns into 2000.
"I'm going to wake up on New Year's Day, '' he said, "turn on my television to see what's
going on, and then be prepared for lots and lots of phone calls.''
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