Year 2000 Legal Services: Seven Reasons You May Need Them

By the year 2001 is your business going to be enjoying the new century's opportunities or reeling from disaster? In many ways the choices you make in 1999 that affect the futureare up to you. If you choose not to make any choices disaster may be unavoidable. This is a time to become more Y2K aware and be pro-active while there is still time to do so.

The millennium issue, Y2K Bug, year 2000 problem revolves around the fact that for years and years dates in computer systems, software custom programs and inside those magic embedded "chips" all used 2 digits to account for a year date. So when 2001 shows up it is read as if it were 1901. Sometime this error shuts down a system or renders it functionless. Other times it merely creates a huge corruption of data that may go on without" detection. This data corruption may not get noticed for months into the year 2000 which can wreak havoc for those relying on that date.

The purpose of this writing is to get the reader to focus on the main macro Y2K issue and then consider the ramifications to their individual business situation and the ramifications to the financial markets potential which affect their savings and retirement plans.

There are 4 physical reasons and 3 people reasons to be concerned with the year 2000 issue as it may affect your life or business. The world has never faced an absolute nonnegotiable deadline before. Nor has civilization ever been more dependent on computers and systems to run our societies.

PHYSICAL

1. Systems and Software - Some machines and software will become obsolete on January 1, 2000 and won't function. Others will need to be re-programmed and re-encoded at great expense. The Federal Government estimates I of 3 government computers will fail completely. Billions of lines of antiquated COBOL coded custom software needs to be remediated one line at a time. This software runs machinery from the factory floor to the Pentagon. Manufacturers of hardware and software from Compaq to Dell to Microsoft all have Y2K issues for all but the very most recent editions of their product lines.
   
   
2. Embedded Chips - These little micro chips are everywhere, clocks, cars, elevators, bridges, rail switches, EPA monitors on smokestacks. There are so many of these little brain-chips that are out there it is like millions of needles in thousands of haystacks. Knowing the chips are there, finding them, replacing them where possible is a huge task. This is the largest and most difficult task facing corporations and governments. Many entities have not yet fully addressed this as a potential problem.
   
   
3. Physical Infrastructure - Will the trains, planes, ships, bridges, river locks, dams, phone switching systems, power grids, airports all function? Many municipalities are way behind the curve. The federal government says many agencies will not be in full compliance by January 1, 2000. The Departments of Energy, Defense, State, Transportation and Education are predicted by OMB to not comply until after 2004. For mission critical systems, who knows how long it will take for all systems to be updated. The FAA has stated it will not be in compliance until 2003 and will have to use its backup system after 2000.
   
   
4. Business Chain Line - Just in time inventory has created potential danger for many companies. You don't just have to have your company in compliance with Y2K, you need to make sure your raw materials supplier, your transportation, storage, distribution, etc. are in compliance. Are your PARTNERS are all going to be working. GM announced in March of 1988 it would begin spending $500 million to address this issue. Ford is already way ahead, it had already funded their suppliers, etc. to become Y2K complaint. It is an interdependent world and onefailure in the link hurts all of the other companies in the business chain. Who do you and your company depend on in your business chain? How do you know if they are compliant?
   
   

THE 3 HUMAN REASONS

1. People put things off and procrastinate. It's human nature. People who are depending on a magic bullet quick fix are going to be very disappointed. We have never had a non-negotiable global deadline. Still far too many people are blissfully unaware, or are hoping for it to just go away, or get fixed.
   
   
2. Greed has made some corporate near term put off the spending of Y2K remediation resources to prop up profits, share price, options, etc. The liability for these decisions may affect the errors and omissions and directors liability insurers. This affects many companies in industries across the board.
   
   
3. There are not enough people on a national let alone global basis to physically re-program all of the code and replace the embedded chips in time for New Year's Eve 1999. So much to do, so little time and not enough people. In the U.S. the problem is bad, globally it's even worse. The Gartner Group estimates the U.S. will be 75% ready on 1/1/2000, Europe 40%, Asia 30% or less.
   
   

So. What to do. First assess your own firm - will your company be compliant? Then look hard at your suppliers and key customers for Y2K failure potential. Third, alert your people to these issues and structure a plan to insulate the firm and educate your employees. Fourth, consider very carefully how Y2K issues may affect the stocks and bonds in your pension plan, 401K, and personal portfolios over the next 2-4 years. This is not a technical problem. It is a business resources management problem. You need to put your plan in place as soon as possible Prioritization is crucial. Time is of the essence, but there still is time.