All About the ESIGN Act: Digital Signatures and the Law

Digital Signatures

Even before the pandemic, the professional world was moving toward increasingly remote operations—and a year of working from home has only accelerated the trend.

Law firms have felt this acceleration in a number of ways, including an even more substantial shift toward digital signatures, also known as e-signatures. We’ll break down the differences between digital signatures and handwritten signatures, what the courts think, and how e-signatures work in practice.

Legality of e-signatures

E-signatures are essentially personal, digital stamps for approving or consenting to a document.

They range from the very basic, such as clicking “I Agree” in response to a list of terms and conditions to typing your full name to importing an electronic image of your handwritten signature. At the most complex end of the spectrum, the Internal Revenue Service (IRS) will ask you to verify your name, social security number, and address from a previous tax year as part of the e-signing process when you file electronically.

Federally, e-signatures have been legal since 2000, when the Electronic Signatures in Global and National Commerce Act (ESIGN Act) was signed into law. The ESIGN Act effectively permits digital signatures to be used in the same way as traditional, handwritten signatures in interstate and international transactions.

On a state level, the Uniform Electronic Transactions Act (UETA) does pretty much the same thing, making digital signatures and records legally equivalent to ink signatures and hard copies. The only three states that haven’t adopted UETA—New York, Washington, and Illinois—have their own similar versions of this Act.

From a legislative angle, e-signatures carry all the weight of an original John Hancock. But how do they hold up in court?

Verifiable in court

Even in the era of handwritten-only signatures, people sometimes disputed the legality of agreements after signing them. Common arguments against having to abide by agreements included inauthentic signatures or being pressured into signing.

Challenges of forgery or a document being signed under duress haven’t gone away with the advent of e-signatures—but it has become easier to prove the authenticity of a signature in digital format. Why? E-signatures have a built-in digital audit trail.

The software you use for e-signatures will gather information such as:

  • When the document was sent for signing
  • When the document was opened
  • Time of signature
  • The signatory’s identity, including name and email address
  • And sometimes additional information like a device’s ID or an IP address

All this information helps authenticate who signed the document and meets the evidentiary burden of federal requirements. When challenged, e-signatures have been upheld many times over in federal and state courts.

In modern practice

So, what does accepting e-signatures look like in practice? Today’s law firms use e-signatures for everything from new client documents and retainer agreements to contracts and other paper orders.

It’s more convenient for the firm—they don’t have to print out and mail documents—and easier for the client, too. No one has to schedule a meeting just to get a signature.

A number of services provide a digital audit trail and authentication for e-signatures—like DocuSign, Adobe Sign, and HelloSign—so you have plenty of options when it comes to choosing the service that fits best with how you run your firm.

Just don’t forget to use your practice management system’s online client portal to share documents with clients securely—and you’ll be well on your way to a smoother, more robust approach to document management.

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