Time is fleeting and this December 31 deadline cannot be extended by agreement. Will you and your law office be ready? How can you avoid the malpractice trap when representing Y2K clients?
According to Reed R. Kathrein of Milberg Weiss Bershad Hynes & Lerach, L.L.P. (San Francisco), a presenter at "Understanding, Preventing and Litigating Year 2000 Issues," a conference sponsored by the Practising Law Institute in April, 1999, these are the evolutionary stages of litigation: defective software lawsuits; defective hardware suits; litigating who is at fault; disaster litigation (1/1/1999-1/1/2000); breach of duty or disclosure suits; then insurance coverage litigation. I would add, the final stage of the litigation sequence would be the professional liability claims, legal and accounting malpractice claims in particular. The extent of the post-Y2K litigation scenario remains to be seen, and may take several years to gauge the result.
Lawyers who wish to prevent or at least minimize the impact of malpractice claims must pay attention to law office operations in addition to the substantive work of representing clients. With regard to potential errors in the practice of law, some may derive from breakdowns in client relation matters, such as enabling the client's unrealistic expectations of large damage awards. Some may derive from failure to draft or review documents thoroughly, perhaps omitting special terminology or clauses. Some may derive from lack of thoroughness in assembling all necessary documents. Other problems may stem from something as simple as missing a deadline, if the law office system has a Y2K failure and a proper backup system has not been maintained.
The standard of care that might apply to representation in Y2K matters is anything but established. Given the fast-evolving nature of the subject, it is impossible to define the skill and knowledge an ordinary reasonable attorney would be required to demonstrate. Since "Y2K Practice 101" was not a course any of us had in law school nor was it on the bar exam, staying up to date in this area is largely a do-it-yourself endeavor. Here are some suggestions, none of which is intended by this author to suggest or establish a standard of care, and they should not be construed as such. Rather, the conservative practice pointers suggested here are proposed as ways to improve your chances of landing in the summary judgment circle, which is where you will want to be if you should ever find yourself as a defendant in a malpractice suit.
I. Competence and Diligence -- Educate Yourself
Generally, a lawyer has a duty not to accept or continue employment in a legal matter that the lawyer knows or should know is beyond the lawyer's competence. TEX. DISC. R. PROF. CONDUCT, Rule 1.01; ABA Model Rule of Professional Conduct 1.1. However, a lawyer may associate another lawyer who has competence in the specialized area. TEX. DISC. R. PROF. CONDUCT, Rule 1.01(a)(1). The goal is to provide competent diligent representation, whether you build your skills in the specialized areas implicated by Y2K, or whether you refer the matter or engage an intellectual property lawyer or technology specialist as an expert.
If your knowledge of intellectual property matters is dim (or dismal), consider attending an intellectual property seminar for beginners. If an intellectual property expert needs to be consulted or sought for referral, then you will know better whether or when to recommend it. Even if you are not attempting to expand your practice toward serving technology clients, having basic knowledge of the terminology should enable you spot Y2K legal issues, which should benefit your clients.
The State Bar of Texas has produced MCLE videotapes from its January, 1999 program, "The Year 2000 Problem -- Computing the Legal Risks for Attorneys and Their Clients," and is providing periodic Y2K programs via telephone conferencing. Also, the Practising Law Institute (1/800-260-4754) has provided a series of Y2K conferences this year, complete with written materials. The Internet has an array of websites and links which provide Y2K resources, and previous TLIE Advisory Y2K articles are posted on our website, www.tlie.org.
II. Practice Management and Readiness for Law Firms
A. Contingency Plans for Law Office Systems
Have a backup plan in case your system falters. Well in advance, print out form templates in hard copy and save your files on hard disk or diskettes, so that instruments could be created elsewhere on a working system. As a last resort, be prepared to type a document the old-fashioned way if necessary. Either way, documents could still be created, which ought to reassure clients such as banks or title companies inquiring about your contingency plans and ability to serve their needs in a timely manner.
B. Utilize Available Assistance
Determine if software vendors will provide enhancements, new releases, technical support (site visits, online support, delivered documentation), or deliver a new release, or even a modified or new warranty. Failing to take advantage of the assistance offered might provide a failure-to-mitigate defense for companies that have announced notice of assistance.
C. Self-help or Contractual Remediation v. Copyright Infringement
Some software changes could modify or nullify existing warranties. Modification of source codes requires caution because of copyright infringement problems; also, remediation efforts may be challenged as providing "unjust access" or creating a "derivative work." However, under an exception to 17 U.S.C. Sec. 117(1), a software owner is allowed to make a new copy or adaptation of a computer program if done only as an "essential step" in the utilization of the program. Access to the source code is critical to any to adjustments, but it may not be available to a licensee, or it might be unavailable if the source code holder has gone bankrupt or out of business. Review any escrow agreements under which access might be granted.
D. Testing, Testing
Testing your own system is essential for at least three reasons: (1) to mitigate business interruption losses that may occur, even if operations do not cease completely for a period of time; (2) to circumvent "fortuitous circumstances" exclusions under comprehensive general liability policies, for situations known to exist while voluntarily using systems or software still in need of remedial action; and (3) to avert litigation over any representations or assurances made about efforts to be Y2K ready. For clients whose systems are integral to their business, the same reasons apply for testing their systems.
To avert complaints about a failure to meet contract demands timely, be sure to document the Y2K readiness efforts, including the remedial measures taken, the rationale, and the testing procedures. This advice applies to your own law office management, as well as clients testing their systems.1 In addition to reducing the risks, documentation creates an audit trail for regulatory or internal controls, and a legal trail of due care regarding key assets, demonstrating the risk reduction efforts.
III. Conclusion
Attorneys involved in Y2K matters have special concerns in representing clients, as well as assuring that their own practices will survive the transition. Testing of systems and having contingency plans will be essential to carry out the obligations of legal representation and meet deadlines.
The duty of competence requires attorneys to be knowledgeable if undertaking representation in this area. The duties regarding proper fees in the attorney-client relationship require careful attention to fee agreements, especially forms used for contingent fee cases. The fee agreement should be prepared with a broad range of remedies in mind that might be available to the Y2K client, and not all are monetary.
The standard of care to which attorneys will be held regarding representation in Y2K matters has yet to evolve. It probably will not be subject to definition until several years hence, when we have the benefit of hindsight. So, be careful out there and don't let the millennium bug bite you!