AS IT SOLICITORS ARE INCREASINGLY BEING ASKED TO ADVISE ON THE MILLENNIUM BUG, MANY SAY THE ANSWER LIES IN OPENNESS AND DISCLOSURE - NOT LENGTHY LITIGATION, WRITES ALISON CLARKE It is not easy giving advice when it is not clear what the problem is, nor whether it is even going to materialise.

But that is what lawyers working in IT departments and niche IT firms have been doing since the mid-1990s, in response to a demand for advice by clients on the possible impact of the millennium bug.

The concern is that computers and equipment with computer chips inside will not recognise abbreviated dates after the start of the millennium, heralding a potential meltdown to life as we know it.

Organisations want assurances that their equipment, and that of their suppliers, is compliant - whether to prevent a shutdown in their own workplace or to ward off potential claims against them by others.Those concerns have fuelled the demand for advice by clients, although Graham Ross, the vice-chairman of the Y2K Lawyers Association, set up in 1998 by lawyers with Y2K expertise, cautions that the demand has not been significant, even though the millennium is not far off.

He says: 'In general, UK business has not been taking the level of preventative advice that it ought to have been taking.

It seems to prefer to pay more money later to get itself out of trouble.'But when it is sought, the demand for advice is wide-ranging.

Companies are asking about their liability for breach of contract, for possible health and safety claims, for the liability of directors, claims for personal injury from employees and in the event of a major catastrophe, their liability for environmental claims.Sarah Kirk, a partner at City firm Nicholson, Graham & Jones, says: 'We are now being asked to check that systems are compliant, primarily in commercial and IT contracts.

Clients want to know about warranty protection and limit of liability clauses.' She says clients also want to know how to protect themselves when responding to questionnaires about whether their own systems are compliant.Iain Roxborough, a partner at Clifford Chance and head of the firm's Y2K litigation team, agrees.

He says his lawyers have been dealing mainly with requests for information and guarantees.

'There has been a lot of correspondence between companies saying: please confirm that you will be compliant.

The issue then is to what extent you give that information and the guarantee that you are compliant.

There is no obligation to do so.'And that, says Andrew Rigby, a barrister and Y2K expert at city law firm Tarlo Lyons, is a problem.

He argues that companies need a limited form of liability to encourage them to make Y2K statements, and criticises the government for refusing to legislate.

He says a voluntary scheme such as Pledge 2000, introduced in July 1998 to encourage co-operation and confidential disclosure of Y2K status, is no longer enough.He points to the USA, which has introduced a law in the form of the 'Good Samaritan Act', providing a limited form of immunity from liability in respect of Y2K statements.

It has also introduced a Y2K Act which sets out a compulsory procedure before a party can make a claim.

He argues that this gives US companies a right to sue in the UK, but not the other way round.He says the advantage of the US 'good samaritan' initiative is that: 'If I make a statement to you about my Y2K status, then I am not liable if you suffer a loss.

The idea is to encourage openness.

One of the problems in the UK - and globally - is the issue of disclosure.

Manufacturers are not under an obligation to ensure that the supplier is compliant, and that is the whole point.'If I tell the manufacturer that I think I have a problem, then the manufacturer may go elsewhere or even sue me for non-compliance.' In other words, there is no incentive for anyone to disclose anything in the UK because the government refuses to legislate to that effect.This has led to a protectionist approach to the situation by companies, a fact acknowledged by Adam Taylor, a partner and head of the IT group at city firm Withers.

One of the main areas of advice requested from his firm is on managing legal risks.

He explains: 'We have been advising companies on how to protect themselves and how to minimise risks.

For instance, they need to be careful in the contractual arrangements they enter into and make sure they address the Y2K issues in the contracts.'But that attitude can, in turn, lead to problems for suppliers, says Deryck Houghton, a partner in the IT group at Rotherham-based Oxley & Coward.

He points in particular to the problems of small suppliers in niche markets trying to strike a deal with bi g name customers: 'There are a lot of customers who think that because they want to contract with a supplier, they can pass total responsibility to the supplier for Y2K.

But it is all about striking a balance and apportioning where the risks and the responsibilities should lie, given the nature of the contract.'It is, of course, impossible to predict whether the current anxiety about Y2K will be translated into litigation next year.

But Roger Bickerstaff, a partner at Bird & Bird, reckons that although there may be isolated problems, there are unlikely to be any catastrophes, at least in this country.

He says: 'I am not aware of any cases which have come to court in the UK and I only know of 50 or so in the States, which is a pretty litigious environment.

So unless things change radically after Christmas, I would not expect much here either.'Mr Houghton is another who is convinced that the priority for companies will be to 'fix the problem, not sue over it'.

He has already handled one major Y2K dispute involving a large household name which was resolved on the basis that litigation was not appropriate.'Both the supplier and the customer were on message that litigation was a waste of time because they would all have had millennium hangovers by the time they got to the door of the court,' he says.Likewise, Mr Roxborough does not anticipate an explosion of litigation.

He says: 'If you talk to the technological experts, the perception now is that there will not be an amazing meltdown on roll-over day.

What is more likely is an accumulation of errors causing systems to malfunction.

You are then looking at something which did not happen suddenly and which will be addressed in a gradual way.'Therefore, it seems that whatever the speed and the scale of the problem, litigation is unlikely to prove the way forward for companies which want a solution to the problem, rather than an award of damages.

However, there will always be disputes that cannot be resolved.

Hence the suggestion by the Y2K Lawyers Association of a pre-action protocol in the spirit of the Woolf civil justice reforms.

It has produced an initial draft of the protocol, which according to Mr Taylor - who is a founding member of the association - is currently being revised.He explains that the principle behind the protocol is to encourage a 'cards-on-the-table' approach.

He says that it is 'for the claimant to give information at the earliest stage about the nature of the claim, for both parties to disclose relevant documents and to give the defendant an opportunity to rectify the problem'.The draft version (which will soon be available on www.y2klaw.org) will be out for consultation in late November, and hopes to attract the support of the Lord Chancellor's Department.

Not surprisingly, Mr Rigby is a committed supporter of the protocol and advises that 'anyone who thinks they might have a dispute might seriously want to consider whether or not they should try to negotiate with the other party a contractual term requiring the protocol to be used'.Despite the anticipated lack of litigation in the new year, Y2K lawyers are confident that their newly-acquired knowledge will not go to waste.

Mr Taylor, for one, argues that 'it has brought to the fore the whole question of risk management.

That is, advice to companies on managing their legal risks and being proactive to minimise risks.

This is not just relevant to Y2K.

It is very relevant to suppliers of IT systems and internet businesses who need to tighten procedures and minimise risks to avoid being dragged into litig ation'.This is a point endorsed by Mr Roxborough, who says: 'Lawyers doing Y2K work have used the opportunity to get up to speed with IT disputes in general.' Mr Houghton agrees: 'Y2K is just one aspect of IT law - it is not the only hot topic.

We will go back to doing what we did before, after Y2K comes about.

We have done this work as part of our IT practice which will continue whether the millennium turns out to be problematic or not.'YOUR FIRM HAS HEEDED ALL THE MILLENNIUM BUG WARNINGS.

BUT THERE MAY STILL BE LAST-MINUTE PRECAUTIONS AND PREPARATIONS TO CONSIDER, WRITES CHARLES CHRISTIAN.It is vital to have completed the various stages of IT systems investigation, audit, fix and testing needed to guard against the millennium bug (not least because failure to do so will breach the terms of Solicitors Indemnity Fund cover).

Given the enormous differences in firms' IT requirements and infrastructures, there can be no universal recipe for avoiding disaster.

But here are some of the potential pitfalls.Freeze all new developmentsDo not make any major changes or additions to your existing IT infrastructure until the end of February - there is a danger that some systems may not recognise Year 2000 as a leap year.

Do not want to risk introducing any unknown factors, such as a new hardware device or an untested software application, until this is known.Leave time for last-minute shoppingSome firms are adopting the view that having already fixed the major problems, minor issues such as replacing or upgrading non-compliant non-mission critical hardware and software can be left to the quiet period between Christmas and New Year.But do allow sufficient time to obtain any replacement systems as much of the commercial world, including the IT supply industry, will grind to a halt on Friday 24 December and not reopen until Wednesday 5 January, while the last date for placing orders to ensure delivery before Christmas will be during the first half of the week beginning Monday, 13 December.Do not reintroduce the bug by the back doorOne of the features of the Y2K bug is that some software, such as accounts and spreadsheet applications, react entirely differently depending upon the date format used.

For example, Microsoft Word 97 assumes double digit dates fall into the range 1930 to 2029 - so 01/03/39 refers to an event 60 years ago.

To avoid potential ambiguities in data ensure staff realise the importance of always using the four-digit format - 1939 or 2029 - and do not slip back into their familiar double digit shorthand.Have you forgotten anything?Some suppliers are reporting that despite having issued Y2K update software to users, in some cases as long ago as January this year, many firms have still not got around to installing it.

So have you forgotten anything? Has your firm taken a Y2K compliancy statement from an IT supplier and left the update disk to gather dust on a desk?Clear the decks just in caseThe end of December coincides with a time at which accounts departments will want to run end-of-month, end-of-quarter, and in some instances end-of-year, bookkeeping and reporting routines.

In fact some computerised practice management systems might be geared up to run these routines automatically on the night of 31 December/1 January.

Given the element of uncertainty surrounding Y2K - and the need to clear the decks in case of disaster - this is one complication too many, so ask the staff concerned to bring forward these routines or delay them until the first week of January.Has anyone asked the staff?A lot of med ium-to-larger sized firms plan to have staff come into the office on Sunday, 2 January (the Monday is another public holiday) so any remedial work can be carried out without additional disruption to normal office routines.

But have you organised staff timetables or agreed overtime rates to take this into account? And, have you considered how the staff will actually get into work, as public transport will either be suspended or running on severely restricted timetables? You may even need to provide alternative transport arrangements.Switch off or keep on?A number of firms are planning to shut down their IT systems on Thursday, 30 December so they can be brought back online and, if necessary, dates reset in a controlled fashion in the new year.But there are concerns that components in some systems, such as network server hardware that has previously been left running for months, may 'blow' as a result of cooling down and then being restarted.

On the other hand, there are also fears that hard disks may be damaged if systems left running are then hit by a prolonged power cut.

If in doubt, consult your hardware suppliers.Is there a contingency plan?Although the growing consensus is that the world will not be plunged into chaos by the millennium bug, there will undoubtedly be some localised problems, ranging from power cuts and intermittent system crashes through to failures of office access and environmental controls.

You certainly do not want to risk starting the next century knowing you have urgent matters to deal with or court appointments to attend but cannot find the details because you are unable to access your computerised diary.

So, ensure your firm has a contingency plan.Can fee earners work from home if the office is out of action? If so, they must download copies of current files onto their laptops and home computers (or make paper copies of important documents) before the millennium weekend.

Ensure everyone in the firm has an emergency list of contact details, including home and mobile phone numbers.

And, make paper copies of all appointments, key dates, to-do list entries and client contact details for the first two weeks of January, just in case.

After that, all you need to do is decide where you are going to hold your 'we survived' party on Friday, 7 January.