What Attorneys Need to Know About Electronic Signatures

USLegal, Inc. - Attorney Newsletter - Summer 2007 Issue

We may think that legal issues involving electronic signatures have developed with recent technological advancements, but one of the first reported cases goes back to the 1800s. In 1869, the case of Howley v. Whipple dealt messages sent by telegraph. The specific issue - do dots and dashes transmitted across a wire constitute a valid contract offer and acceptance? The court held indeed they did.

The modern age of electronic signature law is said to have been heralded in 1995 when Utah became the first state to pass a digital signature act. Today electronic signature laws have been passed on both state and federal levels and the use of electronic signatures in our daily lives continue to grow.

USLegal PR Director Carrie Criado interviewed two key industry experts to discuss the current state of the technology and where it is heading. Marc L. Aronson is President of the United States Notary Association. David E. Ewan is a New Jersey attorney, Vice President of New Jersey Title Insurance Co., and Treasurer of the Property Records Industry Association. The views expressed by Aronson and Ewan are their own and not necessarily those of their employer or any other organization they are associated with.

USLegal Q: In a nutshell, when we are talking about electronic signature law, what are we talking about?

Aronson: Basically, electronic signature law allows for our signatures to include a lot more than just those written with a pen. Signatures can include a "sound, symbol, or process." Some examples are going to the grocery store and using an electronic signature pad to sign a credit card authorization, using an ATM PIN number, or placing a special code on a legal document to constitute a digital signature.

USLegal Q: What is key legislation that attorneys need to know about?

Ewan: Uniform Electronic Transmissions Act ("UETA") - has been enacted in 46 states, the District of Columbia, and the US Virgin Islands. Not enacted in (1) IL, (2) NY, (3) GA and (4) WA. IL doesn't really need, since IL law was used in part to create UETA, and is very similar. UETA allows for all sorts of electronic transactions.

Electronic Signatures in Global and National Commerce Act ("ESIGN") - Federal law that parallels UETA. Interesting in that this federal law has a reverse preemption provision - states can enact other electronic signature laws which preempt ESIGN, but there are limits on what the states can enact. ESIGN contains a non-preemptable provision that requires technology neutrality in any law or regulation. Thus, trading partners can agree to only use PKI (public key infrastructure) technology for their signatures, but generally a state government cannot (either in statute or regulation) prescribe the use of a certain technology (such as PKI) for any signature function as between trading partners.

USLegal Q: What is the biggest benefit of e-notary and e-signature services to the legal profession?

Aronson: At the moment it appears the move toward e-signatures is being driven by the real estate world. The technology is being used primarily by real estate lawyers and mortgage companies to expedite the signing of legal documents associated with real estate closings. It saves time, it saves money, it eliminates paper, and it is a lot more efficient.

Also, more and more states are now allowing attorneys to file court documents electronically.

USLegal Q: Where do you think the technology is headed for the future?

Aronson: Things are a little complicated right now as we are still getting accustomed to the laws and procedures governing electronic signatures, but I believe their use will continue to expand as we apply the technology in all its forms.

Ewan: My belief is that the technology will become even more "transparent" than it is today, and folks won't think twice about the "difference" between a pen-and-ink signature and an electronic one. Within the next five years, as folks get more and more comfortable, they'll use electronic signatures for more and more things, to the point that no one will be writing articles like this (when's the last time you saw an article discussing the difference between a ball point pen and a quill pen?). In 10 years, perhaps we'll be comfortable enough to allow electronic wills (currently excepted from UETA and ESIGN) and other consumer notices (currently excepted and preempted from ESIGN).

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