A Pledge Designed To Forestall Y2K Lawsuits - Brief Article

Nation's Business, May, 1999 by Juan Hovey

The author is a business writer in Thousand Oaks, Calif., and a financial columnist for The Los Angeles Times.

A growing number of small businesses have joined more than a dozen big U.S. corporations in pledging to use mediation rather than the court system to settle any Y2K disputes next year.

Like major companies such as BankAmerica Corp., Aetna U.S. Healthcare, Bechtel Group, Inc. General Mills, Inc., and CIGNA Corp., smaller businesses hope to keep the legal profession from cashing in on the troubles that may strike computers--and all that they oversee in the economy--at 12:01 a.m. Jan. 1, 2000. That's when older computers that read dates as two-digit numbers may read 2000 as 1900 and cease to function properly.

The pledge, developed by the nonprofit CPR Institute for Dispute Resolution in New York City, commits the signing company to attempt to settle any Y2K disputes through negotiation or, if that fails, through formal mediation--both of which are far cheaper than the courts.

"We signed the pledge because businesses need to work out their disputes without attorneys," says Bill Grogg, president of NetPub Corp., a printing company employing about 40 workers in Poughkeepsie, N.Y. Like other business owners, Grogg has also asked his suppliers and business customers to sign the pledge.

Signing the pledge does not cost a company its legal rights, says James F. Henry, founder and president of the CPR Institute. Instead, he explains, signing commits the company to make a good-faith effort to settle Y2K disputes short of a court fight--to forestall legal fees and the disruption of business relations that litigation can cause.

To manage the Y2K danger, Henry advises business owners to:

* Sign the pledge.

* Make sure their information and communications systems are Y2K-compliant.

* Help suppliers and business customers to fix their own problems.

* Modify any contractual agreements with suppliers and business customers affected by Y2K problems.

* Plan now to remain businesslike if trouble occurs.

Many business associations, including the U.S. Chamber of Commerce, are backing measures in Congress that would encourage companies to use alternative dispute resolution in trying to resolve problems caused by the Y2K glitch.

The legislation also would limit businesses' liability for Y2K problems if they made good-faith efforts to fix the problems.

Copies of the CPR Institute's pledge are available by calling the institute at (212) 949-6490, by faxing a request to (212) 949-8859, or by visiting the organization's site on the World Wide Web, at www.cpradr.org.