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1997-12-02 10:05:42


Litigation Costs: 2 to 10 Times Repair Costs



The legal bills for litigation over y2k could be two to ten times the estimated repair costs. No one knows. That's the problem with y2k generally: no one knows. But we have to make decsions anyway -- possibly all-or-nothing decisions.

This story appeared in USA TODAY (Dec. 1).

* * * * * * *

Litigation resulting from Year 2000 meltdowns will be more costly than asbestos, breast implant and Superfund cleanup lawsuits combined, several reports say. Total litigation costs could exceed $1 trillion, according to research firms Giga Information Group, Gartner Group and others. . . .

"It will be two to three times as big as the problem itself - and it will last longer," says Terrence Tierney, analyst at J.P. Morgan Securities and co-author of a report called "The Year 2000 Problem: It's Worse Than We Thought." "Every lawyer in the world is lining up on this." . . .

Gartner Group predicts half of all companies will have computer problems come Jan. 1, 2000. Even if a company's internal computers are OK, it might still have trouble doing business. Telecommunications networks could be disrupted, experts say. Regional phone companies have more than 70,000 programs vulnerable to the bug and they "cannot be repaired or replaced in the 26 months remaining," says software consultant John Zubeck. . . .

Law firms are hiring computer specialists. They're swarming into conferences on Year 2000 litigation, which come at a clip of one major conference a month. The conferences are topped by one in San Francisco in November called Year 2000 Crisis Litigation Summit and one Feb. 9 in New York called Understanding, Preventing and Litigating Year 2000 Issues: What Every Lawyer Needs to Know Now. . . .

Meanwhile, some lawyers say the litigation figures are overblown, although even that serves a purpose. The scary predictions might be prodding more companies to fix Year 2000 problems, heading off lawsuits. "Now that people are paying attention, a lot of the problems will be solved, but not all," says lawyer Jenkins. Still, he says: "Nobody knows what will really happen when litigation starts popping up."

And what if Year 2000 problems do serious damage, and the lawsuits start flying? The most severe figures are that for every dollar spent fixing Year 2000 bugs, there will be $10 in litigation costs. Estimates for the cost of fixing the bug range from $200 billion to $600 billion. That would put litigation costs at $2 trillion to $6 trillion, which seems farcical because the U.S. economy's total annual output is about $7 trillion.


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