December 1999

It’s The End of the World as We Know It (and I Feel Fine…)

The media has had a veritable field day in the past year or so with the coming millennium change. I have (very responsibly, I might add) avoided this parade, partly because the media has blown it out of proportion, and partly because I wanted to save my views for this last edition of the Bar News printed in the 20th century. After much thought and consideration on the topic, here is what is probably a more down-to-earth and pragmatic view of what we can expect this coming New Year’s Eve.

The world is going to end at the stroke of midnight Friday, December 31, 1999, and I can prove it. I know I can prove it because the battery that maintains the clock on my PC died last week. I discovered its demise when I rebooted my PC and in that process, the true and absolute beginning of time was revealed to me. Time began January 1, 1970. Sorry folks, but we only get 30 years… and it’s about up.

I know, I know. You’re protesting that this is all a bunch of bunk because you can remember things that happened before January 1, 1970. Right. Ever heard of "false memories"? My old buddies in the computer industry assure me that January 1, 1970 is, to the best of their recollections, an arbitrary date that was collectively decided upon as the date when all computer clocks start. I’ve read their propeller-head mumbo jumbo explaining the technical reasons for using this date (which they call the "Computer Epoch"). Sure, it all sounds pretty good, and to non-computer-savvy folks it’s plausible. But, I keep getting drawn back to the Theory of False Memories and remain unconvinced, especially since they keep qualifying their explanations as being "to the best of their recollections."

I’ve been watching the increasingly frequent Y2K specials on cable TV lately. The persistent themes tend to fall in the doom-and-gloom predictions of the failure of the National Power Grid and the banking systems. Likewise, the water utilities are predicted to be affected as well.

The power-grid folks keep saying that they’re ready for the clock-tick, but can’t guarantee anything since the guys-on-the-grid-next-door may not have done their jobs properly and, if they fail, it could cause a domino-effect take-down of the whole system. After hearing them discuss the dependencies of the power system on "service clocks" that automatically route power and increase and decrease distribution based upon computerized formulas acting on service-contract data in databases, and information acquired from Global Positioning System (GPS) satellites circling the earth (hey, I don’t make this stuff up!), the listener is left with a clear impression that the power brokers really don’t have a clue about what’s going to happen at the critical movement of the second hand on the Greenwich atomic clock. This strikes me as just a bit on the alarmist side. You won’t see me running out to pay exorbitant sums to acquire a gas-powered generator. No way!

The banker-boys interviewed all swear that their systems are Y2K-compliant, but they aren’t too sure about the other banker-boys’ systems, so they aren’t making any guarantees either. And while they criticize the street advice to have plenty of cash on hand when the clock ticks, they aren’t denying that the federal money printers have been working round-the-clock, making sure that there is a larger abundance of cash than normal in circulation, "just in case." When asked what they’re doing about their own cash position, they tend to chuckle a lot and say little. I used to work for banks. I was involved in the creation and implementation of some of the original electronic funds management and transfer systems they use. My faith in the robustness and reliability of the electronic banking systems is unfazed by the impending New Year, and I refuse to change the degree of my belief in these systems one iota as a result of the Y2K scare. Look for me scrambling to my local ATM for a cash-cache in the last days of the year, and I won’t be found! No sir!

Even the water carriers allow that the water supply "might" be affected. Something about computers controlling the water supply and purification systems and all that. Aw, hogwash! Although I will admit to storing a "nominal" supply of bottled water in my cellar, I’ve always had a supply on store just in case we get hit with that big earthquake they keep threatening us with.

I know, too, that a lot of folks are a little antsy about airplanes and the end-of-the-world-as-we-know-it. But, I’d be perfectly content to be flying at 37,000 feet when the clock strikes midnight in Washington. Well, except that I’d miss a party somewhere.

But seriously — when the 12th bell strikes, some computers will crash. It’s inevitable. And five minutes later, most of them will be back up and running again. Of the few remaining that aren’t back up and running right away, the majority of those will be restarted the next day, or Monday, January 3, when the Information Systems (IS) staff gets back into the office. All but an insignificant fraction will have weathered the shift without measurable damage. And the few that don’t probably need to be replaced anyway. Likewise, if the power grid is affected, the effects will be measured only in the range of hours to a few days. What will be measured in ranges of months to years will have the greatest impact.

The Gartner Group, an industry analysis company, has estimated that the costs of fixing Y2K problems will run in the $300 billion to $600 billion range worldwide. Frighteningly, they also estimate that fully 50 percent of companies with a problem will not be Y2K compliant when January 1 rolls around. This will inevitably lead to litigation. The Giga Information Group, an information technology advisory firm, estimates Y2K litigation costs nearing or exceeding $1 trillion. This is a staggering figure when you consider that it would exceed the combined estimated legal costs of Superfund environmental litigation ($1 billion per year), U.S. tort litigation ($29 billion to $36 billion for 1985) and asbestos litigation ($1 billion per year). A $1 trillion cost for Y2K litigation would exceed the estimated total annual direct and indirect costs of all civil litigation in the United States ($300 billion per year). True, these numbers are speculative. Actual litigation to date of Y2K problems is minimal. Also, until the witching hour strikes, we won’t know how much of the required Y2K corrective work will have been accomplished. Nevertheless, companies’ systems will fail, leading to contract breaches, business interruptions, delivery of defective goods and services, failure in delivery of goods and services, and industrial accidents, to mention a few.

Liability rolls downhill. Affected companies will, in turn, sue computer consultants who advised them on their computer system designs, and vendors and manufacturers of computer hardware and software who sold them non-compliant goods that form the non-compliant systems. This will ultimately lead to suits against insurers to recover litigation losses under errors and omissions policies, or directors and officers liability policies. Many insurers are querying their insureds to ascertain what steps they are taking to be Y2K compliant, looking to such items as: 1) whether the insured has a Y2K corrective plan in place; 2) whether their hardware and software have been tested; 3) whether corporate counsel have reviewed license and maintenance agreements to determine if hardware and software vendors have an obligation to make their products Y2K compliant; and 4) whether the insureds’ critical suppliers are Y2K compliant. Likely, the insurers will adopt the position that Y2K problems are not "fortuitous events" designed to be covered under the policy, and that resulting business-interruption losses suffered due to Y2K are not covered. I’d sure enjoy sitting at counsel table when that precedent is set.

While some parties to Y2K actions are obvious defendants (hardware and software vendors and service providers, hardware/software consultants, corporate boards of directors and top-level management, employers of software programmers, product manufacturers, insurers, and financial institutions), the more interesting list will be that of plaintiffs. Aside from the obvious hardware and software consumers (curiously comprising the obvious list of defendants), Y2K plaintiffs will encompass a much greater realm: the consumers of the goods and services provided by the companies failing to make the Y2K deadline. Even fully Y2K compliant companies may suffer serious damages from their business partners who are not compliant, leading to cross claims against these partners when the Y2K compliant company is sued for breaches caused by inability to perform on a contract. Yes, the fun is about to begin.

But, happily or unhappily, the world isn’t going to come to an end. The same problems we have on Friday, December 31 are still going to be with us on Monday, January 3 (hopefully not joined by too many resulting from the millennial hiccup). As we move into the 21st century, we’re going to have to make fewer of the mistakes we made in the 20th century. We’re going to have to progress and become something better than what we are today. And perhaps, when dealing with the millennium bug, we can all try to be patient and remember that the creators of the bug are, after all, just human, too, and are deserving of our forgiveness whenever possible. We should try our best to find solutions other than litigation in dealing with the problem.

But, if that really good case does comes along, please remember that my consulting rates are very reasonable, and I can always be reached by e-mail or on my cell phone. That is assuming, of course, that they still work….

After spending 25 years in software engineering and development, Rob Apgood suffered a mid-life crisis that seriously affected his judgment. As a result, he relinquished his pocket-protector, acquired a law degree, and, when not out riding on his Harley, can be found most days at the law offices of Siderius Lonergan indulging in latent Luddite tendencies.

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