E-sign your name

In February the Law Society released their latest practice note on execution of documents at virtual signings or closings.

What is the practice note about?

More transactions and contracts are being signed and exchanged remotely rather than at the traditional "completion meeting" where all the parties sign documents laid out on a conference room table (and then crack open the champagne). The Law Society note sets out guidance for solicitors on how to do this and make sure that the contract is validly completed. It covers various different scenarios including the increasingly common practice of scanning the signed copies of the documents and exchanging them by email.

All very sensible, but there is a glaring ommission from the note:- any reference to electronic signatures.

A number of my clients use Echosign or similar services to sign contracts electronically without the need to post out hard copies (or scan and email pdf versions of the signed document). Apparently so do a lot of other companies; according to the Echosign website, their service is used to contract $200 million of business per month.

Electronic signatures are covered in the UK by the Electronic Communications Act 2000 which provides that they are admissable in evidence provided that the signature is "incorporated into or logically associated with a particular electronic communication or particular electronic data".

Having tested out Echosign I believe that it satisfies this criteria (at least for simple contracts rather than deeds). Echosign's note on the legality of electronic signatures certainly confirms that this is their view.

So why doesn't the practice note even mention electronic signature services?

Every day there are warnings about the impact which the Legal Services Act 2007 and new technology will have on solicitors over the next five years.

Against this background, am I right to feel uneasy that our "best practice" guidance as a profession doesn't even mention technologies which some of our clients have been using for years? The note does mention that it isn't exhaustive and that other methods can be used, but surely solicitors deserve some specific guidance.

If the challenges facing the profession are anywhere near as serious as we think, then solicitors need to consider any technology which can help us to work more efficiently. The new entrants into the legal services market certainly will be and the last thing that solicitors need is a reputation for being wedded to old-fashioned and inefficient technologies (fax, anybody?).

Are there any lawyers out there who are using electronic signature services for clients (or even to get your own engagement letters signed)?

It you are (or are thinkinking about it) then it would be great to hear your views.

Comments

[Brian Inkster]

In Scotland we are using PKI (digital signatures) to sign Dispositions (title transfers) and Standard Securities (mortgage deeds) where the conveyancing transaction is carried out through Automated Registration of Title to Land (ARTL).

Clients sign a mandate providing authority to their solicitor to sign electronically. The solicitor has a chip and PIN card issued by Registers of Scotland. A card reader attached to the solicitors PC allows the Registers of Scotland ARTL website to recognise the card and the associated PIN when it is typed in.

When my firm carried out our first ARTL transaction on 7 August 2009 it was only the 39th live transfer of title transaction to occur on ARTL despite the fact that 214 solicitors were at that point registered for ARTL. Today 333 solicitors firms, 22 lenders and 11 local authorities are registered to use ARTL but only a fraction of that are actually using it. Most firms do not appear to appreciate the benefits of using ARTL.

At Inksters We have done several ARTL transactions but could have done many more if the solicitors on the other side of the transaction had been willing to participate. Many appear unwilling to actually progress their first transaction using ARTL. Are they afraid of signing digitally?