Vaultie

Digital Signatures in Law: What You Need To Know

The reality of practicing law in a post-pandemic world is that many lawyers may never return regularly to an office. The legal profession has made increasing efforts to go paperless within the last decade, and while moving towards a largely virtual setup still felt unnatural for most lawyers, many were more ready for it than they may have been 5 or 10 years ago. 

Over the past year and a half websites were brought up to date, new webcams and headsets were purchased for staff for at-home use, and money saved in terminating leases in some cases was instead put towards enhanced software capabilities for client, file, and workflow management. While law offices were declared a necessity to remain open despite any lockdowns, many only needed to remain open for urgent needs. Otherwise lawyers, their administrative staff, and their public have all been learning to navigate this virtual legal landscape. 

What then becomes of the more traditional elements of law that needed to take place in person? Consultations can take place over video conferencing fairly seamlessly, documents can be scanned or photographed from a smartphone, and drafting of claims and letters can happen from practically any keyboard. However lawyers are still required to properly identify their clients, and clients will still be required to sign documents. How can these measures be taken securely in a virtual world?

We’ve recently looked at the identity portion, but wanted to take a deeper dive on digital signatures, and which options may best suit the needs of your practice. 

Electronic Signatures (“eSignatures”)

Broadly speaking, an eSignature is any digital mark that an individual can leave on a document, whether that is a fingerprint or their initials or using a stylus to write their name on a tablet screen. Ontario’s Electronic Commerce Act, 2000, S.O. 2000, c. 17 does allow for electronic signatures to qualify as legal signatures provided they meet certain conditions, such that the signature is reliable and can reliably be traced to the document.

This sort of signature may be commonplace because it is a low-cost, relatively effective solution. When dealing with larger-scale transactions, though, eSignatures present some serious deficits. While most may be authentic, it is impossible to tell with certainty as counsel that it was that exact person who signed precisely that document when they claimed to. Even if an eSignature looks authentic, it is best for low-risk documents, as it does not have nearly the same certainty as watching a client sign in person.

Digital Signatures

Digital signatures are a ‘half-step up’ from eSignatures in that the documents to be signed are password protected. This seemingly adds another layer of certainty, as only the person intended to sign the document should have access to the password, and thus the person with the password is presumably the same one signing the documents.

While this presumption may seem more secure, it discounts the rampant password frauds that can occur now with one wrong click of a button. Computer hackers and other bad actors in the tech world have learned to crack millions of passwords with little effort, and this can easily allow your client’s sensitive documentation to be accessed by the wrong hands. 

Biometric Signatures

Biometric signatures essentially add a biometric component, like a thumbprint or iris scan, to the process so that a signatory is required to identify themselves before they can proceed to sign a document. As a positive note, this adds an extra layer of security to ensure that the person signing is who they say they are.

The challenge, of course, is a logistical one. Biometric technology can be incredibly expensive. Fewer homes and even fewer individuals would have the wherewithal or resources to utilize this technology properly, so it would be impractical for most legal practices. 

KYC-integrated Signatures

KYC (Know Your Client) signatures involve the use of a government ID to authenticate a signatory. This can be beneficial for overseas transactions, or when counsel has no prior knowledge or ability to meet with the person signing. In these instances, the fact that it was KYC authenticated is usually noted on the document. This can be beneficial in situations of high-stakes commerce, for example, or for foreign transactions as mentioned. The largest potential risk, however, is if the client is attempting to use a fraudulent ID as verification.

Blockchain-enabled documents and signatures

Blockchain is often discussed, and just as often misunderstood, but when it comes to signing legal documents it can create the ultimate safeguard. Using a sophisticated network, a blockchain-enabled signature follows the document from its creation through to the moment that it is signed and returned to your office. 

Think of blockchain as the digital version of a paper trail. With several other signature types, there is no guarantee that the chain of custody has remained intact, and no absolute guarantee that the document has not been altered or tampered with, or that the signature is genuine. With the incorporation of blockchain, the signatory uses a government-issued ID that can be verified by the software, and then that ID along with their signature is traced through every step from start to finish. While this may not seem necessary for inconsequential documents, it is likely to become the future for large-scale transactions, major purchases, and other high-risk matters. 

Verifiable Credentials

These are user-controlled credentials that certify the user's ability to make certain claims about their rights surrounding a document. The user controls how, when, and, to whom their proof of signature is shared. With the use of Verifiable Credentials, documents can show ironclad links between the physical signatory and the digital document. The credential allows everything to be tied together (an authenticated government-issued ID, a facial recognition biometric test proving the user is the person on the ID and, a document signed with a KYC integrated signature, including the verified facial biometric test) to provide, as close as possible, a bulletproof authenticated digital document. Notarized and other high valued net worth documents would benefit from this type of highly fraud resilient document authentication method.

Since we started Vaultie, our mission has been to make digital signatures safer and easier for lawyers across all areas of the bar. While not every transaction may be high stakes, you should never have to doubt the authenticity of your client’s signature just because you are not in the same room while they sign. We’ve developed technology to ensure your client’s signature is unquestionably theirs, leaving you with one less thing to worry about. Moreover, your clients can feel comfortable knowing that their signatures and identification are well protected. Contact us today for a demonstration of how our tools work.