E-Signatures – a Booming Market but Not a Slam Dunk

by Justin Shelton, Attorney

Physically printing, signing, scanning, and emailing sheets of paper for transaction closings or contract executions is becoming increasingly rare. Instead, Docusign, Adobe Sign, and other electronic signature services have become widely accepted in recent years, even before the start of the COVID-19 pandemic. In fact, according to a Jan. 2022 report by Fortune Business Insights, the global signature market is expected to reach nearly $8 billion by 2027.

Though these services are undeniably convenient and busy executives and entrepreneurs prefer the speed and ease of electronic signatures, wet signatures still play an important role – especially as it relates to online security and legal complexity.

 

Before you e-sign, consider this

  • Fake Docusign emails have recently been used in connection with phishing attempts. Less tech-savvy clients may inadvertently fall victim to these scams, particularly during a stressful and fast-paced closing.
  • Large transactions with complex closings and multitudes of documents should require a wet signature. If a closing occurs via electronic signature and involves a large number of documents and suddenly the closing date changes, it would result in a huge headache for the party uploading the documents for signature.
  • Some lawyers mandate wet signatures for all documents. Perhaps this is driven by a generational preference for physical attestation and a mild distrust of electronic signatures. Regardless, this preference still exists.

 

Lots of e-signature upside, too

  • Convenience is arguably the most appealing aspect of electronic signatures. The printing-from-home hassle is a real concern given that so many people now work from a home office and lack a fully functioning copier that allows them to print long legal documents.
  • Electronic signatures are ideal for executing documents related to an offering of securities (where the same forms of documents are often sent to many investors) or other situations in which the overall number of documents to be signed by each party is relatively low.
  • Other parties involved can’t claim “sheet slip” or point to any alterations made, as the cryptography guarantees no changes have been made.
  • Clients do not want to take time away from their day to travel to a law firm just to sign documents that can be securely signed electronically.

 

The bottom line

Electronic signatures are convenient, quick, and legally enforceable. However, they are not appropriate in every situation and can sometimes create unnecessary confusion, headaches – and even security issues. Consult a legal expert if you are uncertain about the appropriate use of electronic signatures.