Lawyers slate Y2K bill

The government's proposed Y2K 'Good Samaritan' bill may encourage openness between companies, but IT specialist lawyers say it will make little impact on daily business life. One lawyer believes the Year 2000 Information Disclosure Bill has too narrow a focus and is too late to make any real difference to the way companies conduct business.

The government's proposed Y2K "Good Samaritan" bill may encourage openness between companies, but IT specialist lawyers say it will make little impact on daily business life.

Auckland lawyer Wayne Hudson, a partner with Bell Gully Buddle Weir who specialises in IT, believes the Year 2000 Information Disclosure Bill has too narrow a focus and is too late to make any real difference to the way companies conduct business.

The bill, which is before a select committee, is designed to protect people who "make or republish … a year 2000 information disclosure statement" but has a number of exceptions that Hudson believes will limit its use in business.

"A number of these compliance letters say 'we want to be sure that you are ready [for Y2K] and if you're not we reserve the right to stop dealing with you'." Hudson believes such a request for information will be considered a pre-contractual statement and as such is an exception to the bill. "They don't define what sort of contract we're talking about. A contract doesn't have to be in writing, it can be one that's evident by performance or just a 'yes' to a question over the phone."

He says the only real cover provided by the bill is to statements "provided in a vacuum". "It's basically designed so that those people who have not told the world what their state of readiness is can now do so."

The bill does address the quality of the information given. "It does oblige anyone who is going to make a statement to do a pretty thorough review of their system before making the statement to ensure they're not being reckless."

Hudson says if the bill had been introduced several months ago it could have helped fight off the flurry of letters requesting Y2K compliance information.

The bill isn't retrospective, and only comes into effect on June 1, 1999 running through to June 30, 2001.

Another lawyer specialising in IT related matters would have liked to have seen the bill enacted when the government Task Force initially brought it to government's attention. "You could say it's late anyway and it's pushed out a couple of months," says Mike Cronin, a partner in law firm Russell McVeagh McKenzie Bartleet. "We've got barely six months of it applying. Most businesses that are well down their Y2K track won't get much protection from the bill."

Cronin says companies should remember the bill is intended to offer protection for the statements alone. "For example, if for some reason I said my company is not Y2K-compliant, the bill doesn't get me off the hook for the fact that I'm not compliant and may be liable to you under contract or whatever."

Cronin says the bill is really only about information disclosure. "That's why it's called 'Good Samaritan'. It's people helping out other people, it's not a statutory indemnity."

The other major problem with the bill, according to Hudson, is with consultants. "The consultants are out there helping clients with their audits and due diligence reviews and so forth. They're not covered if they have a contract to perform this Y2K audit."

But at least one IT manager thinks it may encourage openness. Garth Biggs, general manager of IT at retail giant Progressive Enterprises, has written to the Y2K Readiness Commission urging it to do whatever it can to get the bill passed into legislation. Although he is not familiar with its details he welcomes the Good Samaritan bill as a way of allowing companies to be honest about where they stand on Y2K compliance.

"Informally I talk to a lot of IT people and I'm getting a much more positive feel for the state they're in than their lawyers allow them to officially say. Corporate lawyers are effectively advising companies to say as little as possible. The Good Samaritan law would let organisations stand in the market place and be frank about what is happening."

Biggs believes getting this information out into the open would quell any rising tide of panic among the general public.

"What we need to stop is the idea of people lining up on the December 31 to draw their money out of the bank, or people stockpiling food — the whole siege mentality. The principle of organisations being able to say 'to the best of my knowledge we are compliant' would be very helpful in stopping that."

Peter Burdon, press secretary to Y2K minister Maurice Williamson, says these issues should be ironed out in select committee.

The bill is in committee at the moment and accepting public submissions. It is scheduled to be back in parliament on April 28. Both Labour and National support it.

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