First came the assessments. Then the fixes. Now the lawsuits.
Two law firms have filed class actions against several software firms with products that are not year-2000 compliant. One of the first targets is Intuit Inc., the maker of Quicken personal finance management software.
Both suits charge that Intuit sold software it knew would soon be obsolete. The complaints also demand that Intuit correct the problem at no charge.
Mark Goines, senior vice president of Intuit's consumer group, acknowledged Monday that the company knew that only the latest version of its Quicken software was year-2000 compliant. Even before the lawsuits were filed, however, Intuit was planning to address the issue, he said.
The noncompliant programs include Quicken for Windows versions 5 and 6, Quicken for Macintosh versions 6 and 7, and early versions of Quicken 98. The most recent release of Quicken 98-version R3, first shipped in the last few weeks-is year-2000 compliant, but older releases may still be in the stores.
The year-2000 problem stems from the fact that many computer programs do not recognize dates after Dec. 31, 1999.
About 60 financial institutions download information into Quicken for the roughly one million of Intuit's 10.5 million users who take advantage of this feature. The noncompliant versions of Quicken do not correctly recognize all date fields given by banks, according to Intuit.
The suits underscore the need for financial institutions to test not only their own technology systems, but also all of their vendors' products. It may also signal the start of an avalanche of year-2000 legal cases. Some banks are considering liability insurance to protect against such lawsuits.
"If the plaintiffs' lawyers were looking for this lawsuit, there are probably dozens more out there," said Dana McDaniel, a lawyer specializing in technology. Mr. McDaniel is not involved in the Intuit cases.
The Quicken lawsuits were filed in New York's Nassau County and in Santa Clara County, Calif., over the past three weeks.
The Santa Clara case was filed by the New York-based firm Milberg Weiss Bershad Hynes & Lerack, which has filed three similar lawsuits against technology companies. The Nassau County case was filed by New York-based Bernstein Litowitz Berger & Grossmann, which settled the $176 million Texaco Inc. racial discrimination lawsuit.
Several experts from both the banking and technology sectors were surprised to learn that recent versions of Quicken are not fully year-2000 compliant.
Intuit, however, may have satisfied the lawsuits' chief complaint. Last week it said it would be making free upgrades available. The upgrades will be available through June 1999 and possibly beyond, Intuit's Mr. Goines said.
The free fixes throw the future of the lawsuits into some doubt, said Seth R. Lesser, who filed the Nassau County case.
"This will be a significant part of the case," Mr. Lesser said. "I don't know what else we would want to pursue."
Michael C. Spenser of Milberg Weiss said he believes the lawsuits prompted Intuit to offer the free fix. His firm will be watching to see how good and how widely distributed Intuit's solution is.
Intuit had planned to announce its year-2000 plan in May-even before it was slapped with the suits, said Mr. Goines. Calling the complaints meritless, Mr. Goines said he was puzzled by the timing because customers have not yet been affected.
"They will get a free upgrade to their problem before it's a problem," he said.
Customers who have registered with Intuit or use the on-line service should receive notices of the upgrades, Mr. Goines said. Other users who encounter problems can contact Intuit for assistance.
Banks are handling the Quicken year-2000 issue in different ways.
Huntington Bancshares knew of the problem when it signed a contract with Intuit in January, said spokeswoman Hillary Jeffers. Their agreement calls for Huntington to distribute the upgrades.
Crestar Financial Corp. did not learn of Intuit's noncompliance until a few weeks ago, said Hilary Blackburn, electronic sales manager. Her bank does not plan to distribute software and was relieved to learn that Intuit would.
"The bank was concerned," she said. "We want to make sure customers have software they can use."
Microsoft Corp.'s Money and Meca Software's Managing Your Money-the two other leading personal software programs-have always been year-2000 compliant, according to those companies.