Year 2000 concerns bolster legal services

Pressures of the year 2000 crisis have moved beyond IT and into the legal world, with an increase in demand for Y2K legal services. 'People are now asking for specific statements about Y2K compliance and are also setting out the remedies are non-compliance,' says Earl Gray, a partner with Simpson Grierson.

Pressures of the year 2000 crisis have moved beyond IT and into the legal world, with an increase in demand for Y2K legal services.

"People are now asking for specific statements about Y2K compliance and are also setting out the remedies are non-compliance," says Earl Gray, a partner with Simpson Grierson.

"It really depends on the sophistication of the contract and of the two parties involved." Y2K clauses are also being included in a wider range of contracts, not simply in IT related areas, like outsourcing.

"They relate to any supply arrangement where the customer wants some reassurance." Supply contracts can be complex — with recognition that suppliers are also dependent on other people and their compliance is also an issue.

Aaron Davidson, a IT specialist lawyer with Russell McVeigh McKenzie Bartleet, has noticed an upsurge in demand for Y2K legal help. "Pretty much every contract that we review for a purchaser of IT will contain a Y2K clause or warranty."

Davidson has also seen an increase in demand for Y2K audits, where companies assess potential problems with any other company they do business with.

Support is an area of concern for many companies, especially with a number of suppliers announcing limitations on their support.

"The real problems arise where there is no support contract and the supplier announces that this particular product is no longer supported," says Gray. "Under general contract law they could be seen to have supplied you with a product that should work beyond the year 2000." Gray believes that each contract should be assessed for such clauses.

United Party MP Peter Dunne has mooted a bill that would put a cap on the dollar amount companies could sue for with regard to Y2K. This is similar to a Californian bill that would stop consumers from asking courts for punitive damages, or payments for pain and suffering, related to Y2K failures. Customers would only be allowed to seek compensation related to business lost as a result of the failure, and for the cost of fixing or repairing equipment.

But none of the legal experts thought this was a good idea.

"No one suggested a law should be passed to protect Mercury Energy when the power failed in Auckland. Why make a specific law for Y2K?" asks Philippa Harray, a senior associate with Phillips Fox. She hopes the legal implications of Y2K don't overshadow the actual work of fixing the problem.

"Directors are making sure they're covered legally, and that's good, but they shouldn't lose sight of the actual issue, which is fixing the problem." Harray would like to see more time being devoted to Y2K itself rather than contingency planning, although that is also important.

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