NCPA - National Center for Policy Analysis

Heading Off The Lawyers On Y2K

May 21, 1999

Legal observers predict an avalanche of lawsuits against businesses whose Y2K fixes fail on January 1. That is, unless a bill sponsored by Senators John McCain (R-Ariz.) and Ron Wyden (D-Ore.) receives favorable attention soon.

Even companies which have done their best to prepare their computers to recognize the year 2000 cannot be absolutely sure they will be compliant until the new millennium rolls around, predict technological experts. Meanwhile, trial lawyers are gearing up to hit companies victim to the Y2K bug with colossal suits, legal observers warn.

  • It is estimated that litigation could cost companies as much as $1 trillion -- or $2 to $3 on lawsuits for every $1 spent trying to fix the problem.
  • The McCain-Wyden bill recognizes the one-time nature of the problem and provides a short cooling-off period during which companies can bring their computers up to speed.
  • A company getting a complaint would have 30 days to respond, and then 60 day to try to solve its problem.
  • If it doesn't satisfy the complaint within that period, then a lawsuit could be filed.

The National Association of Manufacturers says that the members of its coalition in support of the bill are responsible for two- thirds of the nation's economic output.

The problem is that twice in the last month the bill has been blocked by Senate Democrats -- whose party enjoys hefty contributions and other forms of support from the Association of Trial Lawyers of America.

But with computer-reliant businesses in every state and congressional district, lawmakers would have a lot of explaining to do if they forced many companies into bankruptcy because of Y2K litigation, observers warn.

Source: Editorial, "The $1 Trillion Contest," Investor's Business Daily, May 21, 1999.


Browse more articles on Economic Issues