Law Office Computing

October 1998

Winton Woods

Will Y2K Shoot Down the World Economy?

A few months ago, in this column, I described the so-called Millennium bug problem which is widely referred to as the "Y2K Bug." At that time I was one of a number of computer and information technology specialists around the country raising the alarm over the failure of American and foreign companies and governments to take the Y2K problem seriously. We are now less than 14 months away from the dawn of the new millennium and I am sorry to report that the destructive potential of the Y2K bug is now higher than it was a few months ago. The reason for that is that a remarkably high percentage of intelligent people have dismissed the Y2K problem as a nonissue. The conspiracy theorists think that Bill Gates will solve the problem at the final second and thus gain control of the world's computers. There are other idiotic excuses for inaction that are not even worthy of note. A recent survey of information technology managers from 116 commercial companies and 14 government agencies proclaims that 88% of them expect to have about 76% of their systems fixed by January 1, 2000. But what that really means is that 33.33% of those systems will not be ready. Dr. Ed Yardeni is the Chief Economist and one of the managing directors of the Deutsche Bank Securities on Wall Street. He is highly regarded as one of the leading economists in the country and he predicts a 70% chance of a major recession in the year 2000 because of the failure of so many companies and government agencies described above. One very large part of the problem stems from the fact that as the economy is increasingly dependent upon networks for the distribution of information and products, a failure anywhere along the supply chain can affect us even if we are in compliance. The fact is the information distribution system is in serious trouble and we must act immediately. Here is what we know about Y2K. First, it is a technological problem that cannot be solved by technology. Second, it is an absolutely nonnegotiable deadline. Third, it is a systemic crisis that affects everyone who needs access to the system and therefore one that no one can solve alone. Fourth, it is a crisis that will transcend national boundaries and organizational hierarchies. But the crisis does present us with some positive opportunities. First, it creates an opportunity to work with individuals and organizations to maximize their capacity to respond to crisis. Secondly, and perhaps more important, it provides us with an opportunity to simplify and redesign our major systems. We are, however, quickly running out of time.

Here is what must be done immediately.

• Convert and test critical systems so that you have a fail-safe backup that will keep your business going even if all around you fail.
• Establish the integrity of your network and individual desktops. This is easy to do but takes a little time and money. If you can, plan to back up your entire system on December 31, 1999 and store the back up off line or on a standalone computer.
• Find out whether the vendors and business partners you depend upon are in compliance with the year 2000. Do not accept vague answers. Unless you can be sure, you need to act to protect yourself
• Find out and act on potential disruptions of your supply chain.
• Watch out for crooks and charlatans who either cheat you or steal your information.

If we take this problem seriously and we act upon it immediately, we can greatly reduce the amount of disruption that will occur.

Part of the disruption however comes about from the instructions that are written into embedded chips that are installed in millions of devices from office systems to medical diagnostics monitoring and life support systems, from transportation systems to banking finance and commercial systems, in other words to almost every aspect of modern technological life. Those embedded chips cannot be fixed. The only way they can be dealt with is to replace the chip itself and the worse part of the problem is we do not know which chips will fail. We must await their failure in order to make the diagnosis and that certain problem will undoubtedly create much disruption at the turn of the century.

The inevitable disruption of business and commerce will result in a plethora of lawsuits. Many people say that this is the new asbestos litigation. A more apt example is the breast implant litigation where there is serious debate about causation and nevertheless a plethora of litigation. But Y2K is a much more pervasive problem than either asbestos or breast implant litigation. It may be that the only solution to the litigation problem will be legislation at the national level that exonerates those who make a good faith effort to deal with the problem that is not of their making. One thing is certain, however : those who do not make a good faith effort and who find themselves caught up in the Y2K failures will also find themselves caught up in litigation which will consume them for decades.

I have posted a PowerPoint presentation on my web site at http://www.law.arizona.edu/courtroom.html where you can get more information and citations to places where helpful materials can be found. And, please, do not follow the path of inaction counseled by the many who understand the least. This is serious, serious business and you must act now. The worst is avoidable if we act decisively.