The (Slow) Adoption of Electronic Signatures
I recently came across an article on the Lawyerist discussing Adobe’s online application called eSignatures (currently in beta) which facilitates the signing of electronic documents over a web interface. In other words, no human hand will touch the document for signing. At first I was excited for Adobe’s product since it appeared to make the electronic signing of documents easier. But unfortunately there are still a number of hoops to jump through using Adobe’s product thereby frustrating what should be as simple as picking up a piece of paper and signing your name.
The concept of electronic signatures is not that new. The federal ESIGN Act was signed into law in 2000 and a year before that the Uniform Electronic Transaction Act (UETA) was approved by the National Conference of Commissioners on Uniform State Laws and adopted in almost every U.S. state (apparently Illinois, New York, and Washington aren’t sure the internet is going to be around long enough to make passing UETA worth while). These laws have enabled individuals and businesses to enter into agreements by electronic means but use of electronic signatures has been slow.
We enter into transactions requiring electronic signatures all the time; whether it is from purchasing goods online or accepting insurance policy changes by clicking an “I Agree” button in your browser. However, excluding internet commerce, the use of electronic signatures is not as prevalent. Why? The primary reason has to do with human nature. We generally don’t like change and the idea of signing your name using keystrokes or entering into a binding agreement by a mouse click just doesn’t seem natural.
Another reason for the lack of progress, is that software vendors and other commercial entities complicate the process and force you to use their proprietary format. We’ve all see the feature in Adobe Acrobat and Reader that allows you to electronically sign a document or other products that rely on a key verfication process. These processes frustrate the adoption of electronic signatures since they do not involve an intuitive process and generally relegate you to using a single proprietary standard or product. Why would anyone want to go through 10 or 20 different steps to electronically sign a document when the alternative takes two seconds?
Under most state laws there is no requirement for the convoluted and involved processes that software vendors would like you to believe. For example, take the State of Michigan which has adopted UETA (Act 305 of 2000; MCL 450.831 - .849). Under UETA, an electronic signature is defined as “an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record” (MCL 450.832(h); UETA § 2(8)). In other words, whatever the signer adopts or uses in signing an electronic record it will be recognized as a legally valid signature. There are other legal requirements under UETA, such as document retention and allowing the signor to print or store the signed document, but in general the law is very straight forward.
Software vendors and troglodytes will raise the question of how do you verify that the person behind the signature is actually the person who should be electronically signing the document. The answer is the same way you would with a written signature — based on surrounding circumstances. Let’s look at the following example. An attorney sends a client an engagement letter either by mail or by fax. Once the signed engagement letter is received from the client, how does that attorney know it’s really the signature of the intended person? Because a postal address or a fax number are forms of verification. The attorney may have previously mailed or faxed documents to that person and received a response or other confirmation thereby trusting the mode of delivery. Or if it is a new client, the attorney will verify that the address or fax number is associated with the intended recipient.
The same is true for communications over the internet. Using the same example as above, an attorney emails a client an engagement letter in PDF format for the client to complete. The client reviews the engagement letter, types in the date and name in the form-fields, saves it to their hard drive, and emails it back to the attorney. The authentication or signing of the document was completed upon the client typing the name, and verification was achieved twice when the attorney emailed it to the client and the client emailed it back. Now the attorney has a record of the transmission identifying the electronically signed document including email header information. Additional information could be obtained from the internet service providers for the attorney and the client if the contract ever became the center of litigation.
As I continue to become less paper dependent in my effort to practice law in a completely digital environment, using electronic signatures simply make sense. Electronic signatures avoids delay in waiting for the return of a signed document, saves on the cost of postage as well as the cost of paper and envelopes, and saves on storage costs and time spent trying to retrieve a document.
In the coming week or two I hope to talk about best practices in implementing and standardizing electronic signatures in a business environment. In the meantime, feel free to share your thoughts and experiences on the topic of electronic signatures.
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