You probably think that the Y2K problem, like a drive-by shooting, may happen to someone else ? *but not to me!* Unfortunately the *Millennium Bug* and its progeny, the *Y2K Legal Bug,* are already as present as the flu virus.
Unless you are hunkered down with Eric Robert Rudolph in a North Carolina cave, you rely on computers that could cause legal? as well as technical? problems when the calendar turns to the year 2000. What are the symptoms of the Y2K legal bug? Nothing very exotic. It could crop up as a garden variety breach of contract or warranty case, or as a tort action like fraud or negligence. (Retailers, for example, are already being sued for not telling consumers whether PCs are Y2K-compliant.)
How can you protect yourself against this Year 2000 legal bug? First, find where the germs are lurking. Audit your contracts and relationships, including commonplace items like invoices and purchase orders, that could cause you damage or liability if a Year 2000 failure occurs. Prioritize your risk and seek legal help. Especially look at your software licenses to see if they provide any warranty of Y2K compliance. Have software or hardware sellers or consultants told you that their products will, or will not, meet your New Millennium needs? Some courts have expanded implied warranties to include Y2K claims.
If you haven't already done so, send Year 2000 compliance forms to your vendors and suppliers. Most companies have already taken this step, but better late than not at all. Respond appropriately to Y2K inquiries sent to you by your customers, but don't rule out an unforeseen problem. To gain the full protection of the law, check to be sure that your responses meet the requirements of the new Year 2000 Information and Readiness Disclosure Act.
Contact your computer vendors and seek corrective assistance. If you are the vendor of computer-based products, contact your customers and help them become Y2K secure so they won't be suing you in a few months * and be sure that you have, to the extent feasible, limited or excluded your Y2K contractual liability.
If you have been unsuccessful in obtaining upgrades from recalcitrant software vendors, be sure that you mitigate your damages by purchasing substitute software in time to avoid, or minimize, the losses that will flow from software failure. If you try to modify your software on your own, beware of copyright issues. Don't do anything to waive the seller's responsibility. Watch for the *embedded chip* problem, such as may exist in medical devices and building control systems. The embedded chip ? unlike the more obvious software problem? creates a stealthy hazard that may inflict money damages, injury or death before anyone is alerted to its existence. Do you have any risk of responsibility for such failures?
Review insurance policies for possible protection. Insurance companies have been busily adding Y2K exclusions and will, predictably, deny coverage under either new or old policies. What you put on policy applications could be used against you. File claims promptly, and exploit any policy ambiguities.
If you run a public company, know the Year 2000 disclosure requirements of federal and state laws. The SEC, for example, enacted detailed guidelines last summer. Without compliance, you could get hit with a stockholders' derivative suit or a claimed violation of the securities laws in an enforcement action.
Maintain records that will show what you have done to become Y2K compliant. This will be valuable in pursuing or defending resulting lawsuits. It will also tend to show *good faith business judgment* in case you are sued by your stockholders because of Y2K losses.
Legislatures, state and federal, are enacting laws designed to mandate corrective action, provide *safe harbors,* or limit liability for the Millennium Bug. The laws that limit liability focus mainly on tort liability ? negligence suits ? that tend to provide for liberal damage remedies, but this leaves undisturbed potential suits for breach of contract. So take little solace in the legislation you read about. Review your contracts with care. You can bet that all the new laws, reflecting no consistent philosophy, will in fact encourage resort to the courts if any significant Year 2000 difficulties do occur. An arbitration clause in contracts for Y2K disputes should be considered as a way of avoiding full-blown litigation.
Hopefully Y2K headaches and fever, as either technology problems or a litigation epidemic, will never afflict you. But if they do, a little *legal medicine* now should minimize the suffering ? and at least you will know the legal remedies available to get you back on your feet.