July 19, 2017

E-Sign of the Times

In many aspects, today’s practice of law looks a lot different than it used to, and a major reason is the integration of technology into the practice, specifically the use of electronic signatures. We have come a long way since solely relying on pen and paper as the only way to sign a legal document.

In the era of mobile phones, tablets and laptops, the integration of electronic signatures into transactions is as necessary as it is innovative. With various applications and programs to choose from, now more than ever is it easier to bring the transaction to the signatory rather than needing the signatory to come to the transaction.

Prior to 1999, the enforceability of electronic signatures was uncertain. Many attorneys concluded they were enforceable, but some did not. Regardless of position, there was a nagging doubt. As a result, lawyers still insisted on ink signatures. In an attempt to solve this issue, the federal government and the Uniform Law Commission began working on the issue.

The Uniform Law Commission, which provides state legislatures with non-partisan, well-conceived and well-drafted legislation, began work on the Uniform Electronic Transactions Act (UETA). The UETA was conceived as a response to, and a replacement for, states adopting inconsistent laws governing electronic records and agreements. The Uniform Law Commission prepared draft legislation in 1999, and states began to adopt it. While UETA has been adopted by 47 states, three states did not – Illinois, Washington and New York (although each has adopted a similar statute of their own). Given the number of commercial transactions involving these states, inconsistent legislation would be a problem. However, the lack of uniformity problem did not last long.

In June 2000, the federal Electronic Signatures in Global and National Commerce Act (ESIGN) became law. ESIGN makes clear that “a signature, contract or record related to any transaction may not be denied legal effect, validity or enforceability solely because it is in electronic form.” ESIGN did not completely replace UETA, but it went a long way in validating the use of electronic signatures.

With the exception of a few documents that are outside the scope of UETA and ESIGN, the ability to conduct a transaction has become much more far reaching. In July 2014, the European Union established the “electronic Identification, Authentication and trust Services” regulation (eIDAS) to help facilitate electronic transactions within EU countries.

Notwithstanding the adoption of electronic signatures by states, the federal government and the European Union, some clients and lawyers continue to insist upon ink signatures. Eventually, eSignatures will be standard. The only question is when.