Did you know the Constitution could’ve been signed into law one month earlier had all 56 US delegates relied on digital signatures?
If digital signatures might have accomplished such an impressive feat in 1776, just imagine what they’re capable of doing in today’s world—a world increasingly driven by digital commerce. This mode of signature has existed for over 15 years, yet many organizations fail to use it because of ignorance of its legal admissibility and the efficiencies the technology produces.
However, in light of the following facts, few legal departments will be able to justify opting out of digital signatures, and for a number of reasons.
Digital signatures increase efficiency and accountability in legal departments
P&S Market Research reports that the global digital signature market will witness at a 24.5% CAGR (compound annual growth rate) from 2016 to 2022. This will likely be the case due to waning dependence on paper-based contracts and the relatively slow document turnaround times they produce in businesses. Some research has also suggested that use of digital signature technology can indirectly increase sales.
Is there really a big difference between electronic and digital signatures?
Yes, and failing to understand the difference could result in an embarrassing blunder, so make sure you have the following definitions down solid.
Electronic signatures (E-signatures)
The capturing of the process in which someone has signed an electronic transaction. E-signatures are the legal concept, not the underlying technology, behind the digital signature.
This is what people use to complete the electronic signature process. A digital signature is an encrypted technology containing mission-critical metadata pertaining to the e-signature.
It works to facilitate the production of an e-signature, but is not, in fact, an e-signature in and of itself. An e-signature must prove who signed the document and what document was signed for it to be legally admissible.
Not convinced? Check out this digital signature-favoring legislation.
Although this law is over a decade old, it has created a sadly unused path to greater profits for organizations willing to adopt new signature technology.
This law basically says that digital and electronic signatures are just as good and binding as their paper counterparts.
Videos showing the signing process of a document, an image of a handwritten signature, a typed name in cursive font, and drawing a signature either with a mouse or by dragging one’s finger on a touchscreen, all qualify as digital signatures and, therefore, legally admissible.
However, digital signatures can never be made mandatory, nor are they presently mandatory: People will always retain the right to sign paper documents—otherwise, the law would be discriminatory.
The only documents that cannot be signed electronically do not pertain to organizations, but rather documents governing adoption, divorce, or family law. These oftentimes require the use of a notary.
There are a few simple stipulations to keep in-mind: The original format of some documents, particularly paper certifications, should also be retained to ensure compliance.
It isn’t transforming the file type from paper to digital format that raises legal concerns; however, it’s the disposing of some paper certifications once they are uploaded to digital format that does.
Remember that if a printed file is uploaded via scanner, and the original paper version of the document is thrown away, re-printing the document, in some cases, will compromise the legal admissibility of the document.
If you think the United States is the only country hopping on the digital signature bandwagon, you’re mistaken, and eIDAS (which governs electronic identification for digital services in the European Union) is proof.
The goal of eIDAS is to help the EU recognize each respective member’s electronic identification methods.
If you own a domestic business or run a legal department in the US working on an international basis, this law is proof digital signatures are internationally legitimized, providing greater incentive to use them for efficiency purposes.
Although oftentimes confused with ESIGN, this act only applies to transactions where each party involved has agreed to conduct transactions exclusively through electronic means.
This shows how US commerce has shifted to account for businesses’ and legal departments’ use of digital signatures beyond the scope of legal necessity, extending its relevance to matters of profitability and efficiency—a contract by which traders and businesses hold each other accountable to being as efficient and tech savvy as possible.
UETA is one of the first comprehensive acts ensuring the United States’ “readiness” for an era of digital commerce, and signals the increasing demand for more efficient technologies abroad, too.
Bringing it all together
Not only are digital signatures an easy way to increase the volume of transactions that organizations can process, legislation’s evolved to incentivize their use in a breadth of different industries and departments, particularly those with a strong legal scope. A key component to the future of business and legal agreements, digital signatures are here to stay, and legal departments looking to save money and process a greater volume of information with fewer employee resources should begin exploring digital signature options that work best for them.
What do you think about the prospect of digital signatures in legal departments? Feel free to comment below or learn more about digital signatures’ integration with software that, in conjunction with digital signature use, can further improve your legal department’s processes.
Looking for Law Practice Management software? Check out Capterra's list of the best Law Practice Management software solutions.