Last week Don Cruickshank, chairman of the Government's millennium bug-busting agency Action 2000, told the private sector to brace itself for year 2000 breakdowns in technology.
Despite years of warnings and marketing campaigns, it seems that not everyone's computer systems are set to wake up ready for business on 1 January.
What is more worrying for lawyers working in merger and acquisition, corporate, banking and commercial, is that big business worries over the millennium bug are set to cause a dramatic drop in work between now and the beginning of next year (The Lawyer, last week).
Lawyers say clients would rather postpone deals until after the New Year in case there is a “significant” level of errors in computer-based systems on 1 January 2000.
As a senior partner at Clifford Chance told The Lawyer last week: “Who wants to buy a company that may fall over and die on 31 December?”
Some lawyers believe that the problem is set to impact on their own work. Wilde Sapte banking partner Ian Roberts says: “Clients are well aware of the issues.”
Barry O'Brien, managing partner of corporate law at Freshfields, says: “Clients may want to hold back doing deals that should be settled in that period.”
Managing director of M&A at Deutsche Bank AG, Damian Thornton, says regulatory bodies worldwide, including the Federal Reserve Board in the US, are advising clients not to expand business or at least be very cautious about transactions over the millennium.
In the UK, the London Stock Exchange is advising companies to make stringent checks before buying or merging with other businesses. It has published a list of requirements for companies to follow if they are considering mergers or acquisitions.
Thornton says this is likely to cause a “blip” in closing deals over the next few months.
An Andersen Consulting spokesman says that companies entering into mergers or acquisitions face serious problems from the millennium bug. He says that one of the problems in transactions will be ensuring that the two different IT departments converge.
“The whole year 2000 issue is much bigger than some companies realise. Due diligence tests must now include millennium bug testing,” he warns.
He thinks the financial services in particular industry could be hit. “It is something very pertinent to banks,” he says. “Some banks have systems going back 20 or 30 years.”
Gwen Griffiths, head of banking at Hammond Suddards, says that in the banking world many clients want to push through transactions early to avoid any delays caused by year 2000 problems. The upshot of this is that “this year clients want to make sure transactions complete in early November”.
Nigel Swycher, head of the year 2000 group and IP/IT partner at Slaughter and May, says that although buyers want to act after the New Year, as far as sellers are concerned, it may be a different story.
Swycher says: “There are pressures on both sides. Some sellers want to get transactions through before the year 2000.”
This is so they can off-load millennium problems on to the buyer if the deal is pushed through before the problems set in. He adds that this particularly applies to deals that involve buying a heavily IT-reliant company.
However, he says: “No businesses are going to die. I don't think that everything is on hold because of the year 2000. The millennium bug may even be given a back seat because a transaction may need to be done at that time.
“No transactions are without problems. For many companies it is just another factor when deciding on the risks of investing in a company.”
But he warns that difficulties gaining insurance cover could affect purchasers' confidence.
He says: “All insurance companies have excluded year 2000 disruptions from their policies. Some companies can buy out of it, but very few have.”
Roberts is more confident that year 2000 issues will not cause a slow down in M&A, corporate, banking and commercial work. He thinks the situation has been blown out of proportion.
“No one really knows whether deals will be pushed through or held over. People have various thoughts about whether deals will be delayed but I am sure businesses don't drive themselves on things like this,” he says.
But he agrees that the next few months throw up worrying issues for many clients. He says: “Some banks will have 31 December as their financial end of year. If you talk to some bankers they think the syndicated market will go quiet. These people will not be prepared to sign up on a deal until the New Year.”
Some M&A, corporate, business and commercial work is still going ahead and one set of lawyers who will inevitably benefit from year 2000 are litigators. For these lawyers, the more impact the millennium bug has on businesses the better.
Herbert Smith is among firms that have a year 2000 team prepared to deal with litigation rising out of millennium problems.
Litigation partner Bill Moodie says: “We have put together an internal team of litigators and IT experts. We have insurance people and people in M&A. It consists of about 30 or 40 people. If problems break out we will have a lot of resources.”
Herbert Smith has also helped set up a pan-European network of firms that will cooperate on millennium bug litigation. Called Plan 2000, it spans England, Scotland, Denmark, Finland, Spain, Portugal, Austria, Sweden, Switzerland, France, Germany, Greece, Ireland, Italy, and The Netherlands. Seminars and formal liaisons have already taken place between the firms. Herbert Smith has also struck-up arrangements with US firms.
Moodie says this is necessary because some countries may not be as prepared as others and this may create problems for international companies. He adds that the Herbert Smith team is already dealing with millennium bug cases.
He says: “One of my cases is taking place before the New Year. It is seeing whether the software of a company is year 2000 compliant.”
O'Brien takes a similar line to Moodie. He says: “If there is millennium problem, [litigation] firms are going to be very busy sorting it out. If a settlement concludes somewhere and there are no records then lawyers are going to be involved.
“And if a few aeroplanes are falling from the sky lawyers are going to be involved.”
But Nick Thomas, senior partner of insurance litigation firm Kennedys, thinks the amount of litigation predicted by many lawyers is being over-stated.
Thomas says: “I hope I am wrong but I am not expecting a huge raft of litigation. Vast amounts of problems with computers are not going to happen. It is only the unforeseen things that are going to be a problem.
“There are lots of little things that we don't think about.”
He gives the example of microchips in sprinkler systems that may not work over the millennium if there is a fire in an office building. But he says the chances of catastrophes like that happening are so minimal they will not change the workload of litigators.
He argues that the main problems will be irksome, not devastating, to the running of a company.
Litigation lawyers must wait and see if they are to experience a post-millennium boom, but their colleagues in the M&A, corporate, banking and commercial sectors are already suffering pre-millennial tension as they watch their clients becoming more cautious as January approaches.