Companies hesitant to share year 2000 information

A federal law aimed at encouraging businesses to share sensitive information about year 2000 computer problems has produced scant results, according to corporate year 2000 specialists, consultants and lawyers.

Congress rushed what it called a Good Samaritan law to President Clinton this fall amid growing concerns that many computers and software programs could malfunction if they interpret the two-digit representation of the year -- 00 -- as 1900 or do not recognize it as a valid year.

Many trade groups, including those representing electric utilities, airlines and the computer industry, have been telling the government that fear of lawsuits has been stifling the exchange of information that could help reduce the risks. "Clearly, collaboration is essential as time ticks away," said Tim Morton, vice president at Electronic Data Systems, who oversees a Web site that his Dallas-based consulting and management company has set up as a public forum where companies can report on year 2000 issues. The new law is intended to make it much more difficult for plaintiffs to attack companies, trade groups and other distributors of year 2000 information, even if the information turns out to be faulty or incomplete. Plaintiffs would have to prove that those sharing the information knew it was wrong or were reckless about whether it was truthful. The law does not bar fraud claims and does not cover sales pitches to consumers. It also does not apply to pending lawsuits or restrict the Securities and Exchange Commission's ability to ask for year 2000 information and enforce its disclosure rules. The new law covers two types of information. The narrower category, known as year 2000 readiness disclosures, deals only with the year 2000 status of a company's own products and services. It covers, for instance, any comments by Boeing about its aircraft and any advice from Citibank about whether consumers can expect its automated teller machines to dispense cash. The other category, known as a year 2000 statement, is far broader, including comments on other companies' products or projections about the impact of possible year 2000 problems. A utility trade group, for example, would have some protection if it estimated how long power plants could operate on stockpiled coal if railroads were unable to ship new supplies, as would a hospital that reported to others that a particular medical device failed a year 2000 readiness test. The experience so far with the new law raises questions, though, about how much pent-up desire there is to share year 2000 information freely. At the very least, it suggests that while it is popular to blame lawyers for discouraging such activities, many other factors have also been involved. Some companies, for example, fear use of the information by regulators or competitors. The new law's main impact has been to send businesses scurrying to lawyers. Computer users are unsure how much shelter the law provides and whether taking advantage of it in some cases is worth the trouble. "Our phones were ringing off the hook as soon as the law passed," said Wynne Carvill, a partner in the large year 2000 team at Thelen, Reid & Priest in San Francisco. The rush for legal counsel stemmed in part from a provision giving companies a 45-day window to bring some statements made as far back as Jan. 1, 1996, under the umbrella of the law. That window, which was opened when Clinton signed the bill into law on Oct. 19, closed last Thursday. The retroactivity provision applied only to readiness disclosures. Lawyers say there are several twists to the provision that may undermine its value, including one requirement that everyone who received the statement be informed that it is being reclassified as a protected disclosure. Another provision gives any customer who already relied on the statement 45 days to object to its being reclassified. "Most of my clients think it's not worth the effort to go back and dig up what they said in the past," said Mark Pomeroy, a lawyer in Columbus, Ohio. Many year 2000 project managers say information is beginning to flow more freely. But both the managers and lawyers say pressure from regulators and customers, not the new law, appears to be the driving force. "I haven't seen people saying more because of the act," said Michael Siavage, an Atlanta lawyer whose firm, the Red Hot Law Group, has many software companies as clients. That could change, many experts say, as more industry groups organize clearinghouses of information patterned after the group set up by major automakers. John Koskinen, chairman of Clinton's Year 2000 Council, has been encouraging the formation of such groups. "The critical thing is to exchange more technical information, not readiness statements," he said. "This is a way to jump-start those who are late into the game." Koskinen said he would like to see such information open to the public but that the crucial thing was to make sure industry groups made it freely available to everyone in their industries, including companies that do not participate in trade groups. George Surdu, global coordinator of the Ford's Year 2000 efforts, said the law would prove to be helpful in the long run. "The speed of enactment sent a strong message," he said. Backers of the law are already lobbying Congress to close what they see as loopholes that limit its protections and to pass other measures that might limit future lawsuits.

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