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. Last Updated: 07/27/2016

Wait for the Fat Lady to Sue Over Y2K




LONDON -- "It ain't over till the fat lady sues."


That's the message that greets visitors to the web page of Ross & Co., a law practice in South Wirral, northwest England, which specializes in millennium computer bug lawsuits.


www.y2kalert.com/fatlady is a reminder to those who believe that the lack of mayhem caused by the millennium computer bug over the New Year proves it was a nonevent.


"Stories about the death of the millennium bug have been exaggerated," said Mark O'Conor, a lawyer with Bird & Bird.


Lawsuits worth hundreds of millions of dollars are in the pipeline, seeking damages for a range of problems.


Some corporations will allege over-charging by information technology consultancies, or that consultants induced work that was unnecessary.


Other companies might seek to recover huge sums spent on new computers because they were persuaded that unless they were installed, the business might disappear into a cyberspace black hole.


Also expect lawsuits from shareholder groups who wonder why companies in Britain and the United States spent vast amounts to insure their equipment against the bug, while state-owned enterprises in countries like South Korea and Italy, with similar equipment, spent nothing and had no problems.


The lack of any spectacular evidence of millennium bug problems did not surprise experts like the Gartner Group of the United States.


The information technology research company said such expectation showed a lack of understanding of the nature of the bug.


The Gartner Group, which reckoned that the global cost of repairing the bug would be between $300 billion to $600 billion, said fewer than 10 percent of problems would occur during the two weeks surrounding Jan. 1, 2000. Fifty-five percent of problems would hit over the rest of the year.


"It's too early to say what [legal action] might come out of the woodwork," said Alistair Maughan, a London partner with law firm Shaw Pittman of Washington.


Graham Ross, partner at Ross & Co., said companies that were persuaded to repair software or buy new computers to avoid being hit by the bug might sue, alleging the original equipment should have withstood the changeover to 2000.


Other companies might seek to invoke the so-called "Sue and Labor" principle. "Sue and labor" originated in marine insurance and covered a shipping company if it was forced to take emergency action against an imminent threat, which, if action was not taken, would sink the vessel. The expense of the purchase of new computers or expensive IT advice to avoid the millennium bug could in theory be charged to insurance on these grounds, Ross said.


Smooth talking sales staff might have persuaded companies to make unnecessary purchases.


"You might have been advised to buy new PCs [personal computers] when all that was needed was a simple bios [internal clock] fix. If the company was motivated by a plan to sell more computers rather than just fixing the problem, if you spent money unnecessarily you might have a claim," said Ross.


Shareholders may also be wondering if huge sums spent to stop the bug might mean company directors have breached fiduciary obligations.


According to Ross Anderson of Cambridge University's Computer Laboratory, British Telecommunications and South Korea bought similar telephone hardware in the late 1980s. Speaking in the middle of 1998, Anderson said BT would spend around pounds 500 million ($800 million) making sure it was not destroyed by the millennium bug. South Korea up to that point had spent nothing because it didn't see a problem.


"They can't both be right," Anderson said at the time.


In the event no big problems were reported from BT or South Korea. Shareholders will want to hear convincing reasons for spending on this scale and could seek compensation from directors if huge sums were judged to have been spent unnecessarily.


But most company directors and consultants can breathe easy, according to Julian Stait, partner at Dibb, Lupton Alsop.


It would be tough to prove that company directors were to blame for excess spending. "The fact that they spent lots of money and then had no problems might show ... they spent the money well," Stait said.


Last year, when some commentators still worried about some kind of millennium meltdown, estimates from the United States reckoned that litigation induced by millennium bug failures could lead to claims of up to $1 trillion.


Would there still be a wave of law suits or a trickle? "Somewhere in between. There were lots of disputes in the U.K. last year; a couple went to mediation. One was worth about pounds 200 million and one or two still remain to be resolved," Stait said.