The question, which came from the back of a conference room at a posh desert resort, reverberates through corporate boardrooms: even if our company suffers no significant breakdowns at the beginning of next year, how can we defend ourselves against shareholder lawsuits if year 2000 problems throughout US business sectors lead to a 20 per cent drop in the stock market?
"There aren't any easy answers," said Claude M. Stern, a partner at Fenwick & West LLP, a Californian law firm, who fielded the question at a recent Business Week conference. The good news: it's "extremely difficult" to assign and prove blame for any failures, he said.
Most economists say international supply-chain disruptions and pockets of domestic glitches won't rattle the markets. One exception: Edward Yardeni, chief economist at Deutsche Bank Securities in New York, has said there's a 70 per cent chance that Y2K will lead to a global recession.
"I don't see a stock market crash at all," said Roger E. Brinner, chief economist at The Parthenon Group in Boston. And David Hale, chief economist at The Zurich Group in Chicago, said year 2000 problems will disrupt US businesses but "will boost output" in the short term.
Can't help but worry
Nevertheless, executives are worried. "Even if our company is operationally sound, how do you avoid [lawsuits]", asked Bill Priesmeyer, chief financial officer at Jostens, a Minneapolis-based marketer of yearbooks and class rings.
"We're just going flat-out to make sure we can operate," said Thomas J. Volpe, the chief financial officer at The Interpublic Group of Companies in New York. The steps Interpublic is taking include leasing fully equipped office space on the outskirts of cities around the world in case of urban power grid failures.
Others believe year 2000-related lawsuits are unavoidable. "Everyone is suing everyone else over this -- what are you going to do?" said Ronald A. Plomgren, chief financial officer at Longs Drug Stores in Walnut Creek, California.