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For Rob McKay, office manager of the 12-attorney Feldman Gale & Weber in Miami, April 5 started out just like any other day. As usual, he arrived at the firm’s 19th floor downtown office at 8:30 sharp. The lawyers and the 30 other staff members started arriving a few minutes later. After bolting down a cup of coffee, McKay sat down in his office and booted up his computer. To his dismay, he found that the firm’s Internet connection and e-mail system — provided by San Francisco-based NorthPoint Communications through Miami-based DSLI Corp. — were down, and that there was no way to quickly get them back up. The firm was rendered virtually incommunicado. Its lawyers could not conduct online legal research for their cases. The firm’s three name partners sent their lawyers home to do any online research that was needed on their home personal computers. One of the name partners, Jim Gale, missed an important e-mail sent to him by a client and almost missed a filing deadline for an important emergency injunction hearing. Gale says the name partners alone lost tens of thousands of dollars in billable hours while dealing with the shutdown problems and researching what kind of recovery the firm may be entitled to. “It was a nightmare,” McKay says. “It turned everything upside down.” Law firms and other businesses are increasingly reliant on high-speed Internet and e-mail services to conduct their affairs. Any interruptions mean lost revenues. But Internet outages like the one at Feldman Gale, which many companies have experienced, raise questions about whether law firms and companies can afford to have so much riding on the performance of their Internet service providers — and whether there are any good alternatives. Feldman Gale was one of about three dozen small and midsize South Florida law firms — along with dozens of other businesses — that suffered a shutdown of their NorthPoint-provided digital subscriber lines (DSL) in early April. More than 2,400 DSL lines were affected in Miami and Fort Lauderdale, according to NorthPoint. Nationwide, 100,000 lines serving 500,000 users were affected. The service problems were related to NorthPoint’s bankruptcy and sale to AT&T. Larger law firms with more expensive Internet connections like T1 LAN lines are hardly immune to service interruptions related to market instability in the technology sector. Richard Berman, a spokesman for Covad, a Santa Clara, Calif., DSL provider, cautions that they could face the same problem if their providers run into financial troubles. “Whether you get shut off or not has nothing to do with the technology you have,” he says. E-MAIL EXILE When the NorthPoint service interruption occurred, Miami-based Fowler White Burnett Hurley Banick & Strickroot was in the middle of setting up a three-attorney office in Fort Lauderdale. Office manager Ray Lusac says the firm had to delay the opening of the office for about a week until a new DSL provider could be found. “It’s hard enough just getting everything in order in a new office,” Lusac says. “This was just another headache to deal with.” Daniel Polley, a partner at the 22-lawyer Miami firm Malin Haley, says losing the ability to research and communicate via computer meant lost revenue. Staff productivity suffered. And new business fell off because many prospective clients make their first contact via e-mail. “What’s a potential client going to do when their e-mail to the firm gets sent back saying the message couldn’t be sent?” Polley says. “They may think we went out of business and they call someone else. It was very frustrating. TECH VOLATILITY Before its national DSL shutdown, NorthPoint had been in merger talks with Verizon Communications. When Verizon abruptly pulled out, NorthPoint filed for bankruptcy and was forced to seek a financial bailout. Then, in late March, AT&T agreed to buy NorthPoint’s assets. But the telecom giant refused to pick up any of NorthPoint’s wholesale customers. NorthPoint claims it couldn’t afford to keep its DSL system running while its customers searched for alternate providers. On March 30, the California Public Utilities Commission said NorthPoint, which is expected to close its sale to AT&T in about a month, must restore DSL service to 40,000 customers and that it must offer all customers 30 days notice before shutting down service. Some former NorthPoint customers blame AT&T for the shutdown. Petitions are circulating on the Internet, criticizing AT&T for not picking up NorthPoint’s customers; many signers have promised to punish AT&T by canceling their long-distance, cable and wireless accounts. The lawyers at Feldman Gale share that sentiment. Gale argues that NorthPoint and AT&T either should have shifted all NorthPoint customers to the AT&T service or that NorthPoint at least should have given its DSL customers enough time to find a new provider before pulling the plug. In retaliation, Gale intends to cancel his firm’s cellular phone contract with AT&T. ‘VERY SORRY’ Officials from AT&T and NorthPoint told the Daily Business Review that they were extremely sorry for the shutdown. But they insisted that the situation was beyond their control. Manuela McCall, NorthPoint’s vice president for product management, says the company tried desperately to obtain funding to keep the system going until customers could switch, but was unsuccessful. The bankruptcy filing, she says, complicated matters. But she contends that the company did notify its customers ahead of time that the shutdown was coming. It posted a notice on its Web site on March 22, warning that because of a lack of funds and the nature of its buyout agreement with AT&T, a DSL shutdown was “imminent.” Customers, however, were not notified individually. “This was just a very unfortunate situation,” she says. Mark Seigel, a media relations manager for AT&T, says he understands that some people were upset that his company bought out NorthPoint’s assets without agreeing to serve NorthPoint’s customers. But he contends that AT&T serves retail customers and could not pick up NorthPoint’s wholesale business. “Fundamentally, NorthPoint has a different business model, which is not compatible with our own,” he says. “We’re very sorry over the way customers were affected.” Covad’s Berman says that because businesses have become more dependent on DSL service, they need to be more savvy in picking their providers, particularly with the current precarious market environment for technology companies. Gale agrees. In the future, he says, he will pay more attention to the business activities of the company providing his Internet service. However, he adds, law firms like his will always be vulnerable to technical snafus as more and more legal work is conducted online. In response to the growing anxiety about Internet service reliability, providers are offering some solutions. Covad recently implemented a “Safety Net” system to protect DSL users when providers like NorthPoint go belly-up. When a shutdown is looming, Berman says, all affected customers immediately receive a disk that enables them to access a DSL through another provider. The switch takes about two days. Most law firms and businesses hit by the shutdown were back to normal the week of April 23, having found alternative DSL providers like Rhythms, Earthlink and Flashcom. Feldman Gale regained partial e-mail service by Tuesday of the week after the shutdown. But it took until April 23 for the law firm to restore full e-mail and Internet service, when it obtained a DSL hookup through Miami-based Rhythms NetConnections Inc. LEGAL REPRISALS? The anger, however, is still simmering. Gale says his firm is studying its legal options. He says the total economic impact on the firm from the shutdown is incalculable. The worst damage, he contends, was to the firm’s reputation with its clients, who expect it to have a reliable e-mail and Internet system. “This isn’t the way a company should treat its customers,” he fumes. “You don’t just disrupt people’s business by leaving them to dangle in the wind.” NorthPoint’s McCall says she’s not aware of any lawsuits filed against her company for damages associated with the shutdown. She would not say if she anticipated any, but suggested that suing a bankrupt company wouldn’t make much sense. AT&T’s Seigel said he doesn’t expect lawsuits to be directed toward his company because it was not obligated to take on NorthPoint’s customers under its purchase agreement. Nevertheless, legal reprisals may be on the way. Gale says the apology from AT&T and NorthPoint “rings false” and that more could have been done to warn customers to seek out alternative DSL providers. “This is not going to be the end of this,” he warns.

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