27 Apr 2017

Gone, on the most part, are the days where you have to physically sign a document with a pen on paper, all because technology has developed and is about to revolutionise this process.

It is nearly a year on from the EU introducing the Regulation on Electronic Identification and Trust Services for Electronic Transactions in the Internal Market (910/2014/EU) (“eIDAS”). eIDAS has attempted to synchronise individual countries’ diverse approaches to e-signatures into one overarching set of rules. So, after a year of cross-border agreement on how to treat e-signatures, where are we now and are they here to stay?

What is it?

The legal industry is notorious for baulking at the idea of change. However, for effective document management, efficiencies and ultimately cost savings, the ears of decision makers slowly prick up. Set this against the constant drive for innovation, high-growth companies and increasingly tech-savvy individuals within the UK and you can begin to see how e-signatures are being adopted into business dealings.

The Law Society and The City of London Law Society have strongly endorsed e-signatures and published examples of electronic signatures following eIDAS, as follows:

i)   a person typing their name into a contract or into an email containing the terms of a contract;
ii)  a person electronically pasting their signature (in the form of an image) into an electronic version of the contract in the appropriate place;
iii) a person accessing a contract through a web-based signature platform and clicking to have their name in a typed or handwriting font automatically inserted into the contract in the appropriate place;
iv) a person using a finger, light pen or stylus and a touchscreen to write their name electronically in the appropriate place in the contract.

What’s actually happening?

We are seeing that the use of an e-signature platform service is growing in prevalence and popularity. There is an array of providers of such a service and they all tend to offer a secure, legally enforceable and end-to-end user service. These can be used by companies themselves and are increasingly being offered by law firms and other professional service firms.

In practice you identify and draft the documents which will require signature, upload those documents in any format you choose, select the individuals you wish to sign the document and highlight where each person is to sign. An email is then sent to the individual with a secure link to the document where they sign by typing their name, clicking a box or inserting an image of their signature. The e-signature platform can then print the individual contracts or create a composite document which incorporates all of the signatures.

Using this system you can sign documents, contracts and commercial agreements anywhere in the world, at any time with just your index finger and a smartphone.

Any issues?

All of the above makes it sound as though any professional service firm not offering this service is missing a trick, but are they? What are the downsides?

It is only natural within English law to have exceptions: HM Land Registry and the Stamp Office will only accept documents that bear a wet-ink signature which immediately discounts a number of transactions for which e-signatures can be used.

Further to this, the practicalities of witnessing an electronic signature mean that for some documents, namely deeds, which require a witness, it will still be difficult to sign these electronically. Arguably this would rule out many real estate, trusts, wills and estates transactions and agreements further limiting the scope for e-signature usage, although legally there is no substantive reason as to why e-signatures cannot be witnessed either through video conferencing or some other verification.

The key issue restricting a more universal uptake of the technology is that of trust. Also, e-signature platform providers ordinarily operate within the cloud which has inherent risks and vulnerabilities which wet-ink signatures do not bear. However, as time goes by and there is increased confidence and demand for e-signatures, so will the trust and uptake increase. Whether this is voluntarily or as a by-product of demand is yet to be seen.

If you would like more information on how electronic signatures can be used to streamline your business transactions, please contact Hugo Christie, or a member of the Commercial & Technology team.