Using Electronic Signatures in a Legal Context

Electronic signature.jpgA signature has been used as a formal obligation and personal certification for centuries, but are you ready to potentially sign your life away on the electronic dotted line? The use of electronic signatures in everyday life is now commonplace, with as many as four in ten signatures written in the UK to sign for deliveries, often using an electronic device.

E-signatures are efficient and easier to enforce, with the improvement for general customer service a significant benefit. However, uncertainty in their admissibility has meant that the uptake within law firms and businesses has been slow — most are concerned that e-signatures could still be challenged in court.

The Government has taken steps to help clarify this uncertainty, with independent legal experts advising that electronic signatures can be used to sign formal legal contracts under English law. The Law Commission has also suggested that an e-signature can be treated as the equivalent of a written signature, without the need to create a new law to confirm this. This clarification could have major implications for legal documents, including Lasting Powers of Attorney, credit agreements and land sales.

What are the benefits of using electronic signatures?

  • Increased efficiency. The sheer complexity and length of legal documentation in itself can take hours to handle; the addition of having to send out copies for clients to manually sign and return can add days if not weeks to the entire process. After introducing e-signatures, some law firms have seen 45% of agreements were completed and returned in less than six hours.
  • Ease of enforceability. Again, transactions, confirmations, and authentication procedures can be sent out via email through a secure link with a simple and intuitive process.
  • Lower cost. Whilst less paper is good for the environment, it’s also good for the books. You not only save on copy printing costs but also postage, mailing supplies and time.
  • Enhanced convenience. An electronic signature allows for remote authentication, all around the world.
  • Enhance client experience. Arguably one of the most significant benefits is the change it makes for your customers. In today’s society, speed is everything. Electronic signatures allow you to react and communicate with your client quickly and provide them with the service they need in a timely manner.
  • In turn, this improves loyalty and customer retention. A client is much more likely to work with you after a smooth and seamless transaction.
  • Differentiation from the competition. The legal sector is largely traditional and resistant to change, despite the need to evolve with technology to ease over-complicated and slow processes. If you’re one of the few legal firms to incorporate current technology it will make you stand out from the crowd.

The Implications of Electronic Signatures

One of the issues with electronic signatures is that it is near impossible to have an intricate or specific signature when signing via an electronic device. According to legal advice, people will now need to create a new signature design that remains consistent across all instances.

There is also concern that the simplicity of it could actually result in consumers making rash decisions; if all you have to do is click a button, people may enter into contractual obligations without comprehensively reading and fully understanding the implications. Arguably, signing a piece of paper can make you stop and process what you are signing.

Potentially the most significant implication raised is how do you determine the difference between a signature and simply typed names - could an email with a name typed at the bottom be classed as a signed document? And further to this, do you need a witness for an electronic signature?

Residential conveyancing solicitors FBC Manby Bowdler have expressed that although they can see the benefits and do accept electronic signatures in some circumstances, the industry just isn’t quite ready for a shift towards electronic signatures. Certain areas of the law, for example, the Land Registry and Companies House, will only accept hand-written signatures at present, which means it’s simply not possible to roll out across the entire business until the process becomes better regulated.

Moving forward, the Law Commission has proposed that electronic signatures could be witnessed via a webcam or video link instead of a physical witness, which could have a significant impact on the methodology and working culture of a law firm, again maximising efficiency and productivity. There is further discussion of facilitating the electronic execution of deeds through the use of a shared online platform to witness documents from various locations.