As the UK enters a further period of remote working, electronic signature software seems likely to continue its growth in usage and adoption, facilitating fast and organised authentication of business documents. This durable change goes beyond lockdown, and is part of a much bigger transformation, using data and technology in new ways to change every area of legal services. This article is Part 2 in Obelisk’s LegalTech 101 Series, following on from last month’s publication of Blockchain: an update in 2020 for Legal Services.
Part 1 of of this guest introductory article by Obelisk consultant Lisa McClory, Knowledge Lawyer and expert in Legal Technology, covered the definition of electronic signatures, their implementation and key recent developments. In Part 2, Lisa McClory discusses legal and practical questions linked to electronic signatures as well as automation and integration opportunities. This is particularly helpful for law firms or companies considering the introduction of an electronic signature platform for the first time and planning where to begin, which areas are easiest to tackle, and how to create the conditions for a comfortable, supported release of new technology and process.
Examples of Practical and Legal Questions
In Part 1 of this article, we considered some areas where law and practice relating to electronic signatures have recently been updated by registrars and policy-makers. This additional clarity is helpful. Nonetheless, there remain areas which can be tricky for businesses to manage, generally combining uncertainty over the application of legal rules with very practical questions over the precise settings of particular software, or arrangements requiring communication with transaction parties.
Legal validity for different types of documents
Requirements for valid execution vary, depending upon the type of document which is being signed. Lawyers must consider the process for providing evidence of authentication alongside other legal requirements for validity, which may be set out in statute (for instance, within the Companies Act, for corporate authorities) or pursuant to Registrar’s requirements or statements or policy, as well as in other types of legal document, such as Articles of Association.
The Law Society’s 2016 Note remains a useful reference point for a variety of documents and legal procedures, including deeds and counterpart execution, as well as statutory formalities. For complex transactions, it is important to plan for use of electronic signatures well in advance of completion, leaving time for agreement of any particular legal questions with senior lawyers, clients or transaction counterparties, where appropriate.
Transaction Management and Legal Opinions
The Law Society’s latest guidance note advises practitioners to speak to the lawyers on the other side of any transaction to ensure that there is clear agreement on how to manage the transaction. This should include agreement of a process for use of electronic signatures. Good practice could include preparation of a memorandum, setting out any particular requirements concerning dating, identification and 2fa, witnessing (including detailed logistics for witnesses present, and use of specific modules for witnessing to ensure document confidentiality), dealings with documents post-completion and settings, such as switching capture of parties’ geo-location data off or on.
Particularly where documents which are executed might be needed within a future transaction (for example, on an anticipated future sale of a company), legal teams should take into account how electronic signature would be perceived as part of that transaction, and advise clients if a particular type of document could trigger a qualification to a legal opinion of due execution, or a requirement for an indemnity (or other contractual protection).
Supervision and processes
Businesses can plan an efficient process for integration of electronic signatures into pre-existing workflows and processes by looking for areas of the business with predictable volumes of similar transactions.
Where electronic signatures are to be used generally for complex matters and different types of documents, legal teams can think about processes to ensure supervision of application of signing tabs, including guidelines setting out the experience level of lawyers who should have oversight of the system, or using a group mailbox to allow a team to monitor document bundles which have been sent out for signature.
Settings and administrative tasks
Some of the work required by legal teams initially when using an electronic signature platform is likely to seem quite administrative, This might also include detailed thought about how to apply settings. For example, where documents are not to be completed until dated, lawyers may need to add a ‘free text’ tab, rather than a tab which automatically populates a signing field with the date when signature is applied.
Lawyers also need to think about detailed practicalities, such as whether an email address operated by the legal team should be added as the final signatory, to permit the time of application of the date to be picked up by the completion certificate alongside the signatory metadata.
As practice evolves and with the introduction and amendment of new features (such as e-witnessing modules) from time to time, it is important that lawyers engage with detailed process and consider the legal implications of technical settings.
Opportunities for further automation
Over and above the day-to-day efficiency which can be created by using electronic signature technology, there are also bigger opportunities to automate using bulk sending to replace mail merge processes, or by putting in place integrations between electronic signature platforms and data room software or contract lifecycle management systems.
Bulk sending functionality
Detailed settings within electronic signature platforms can allow teams to automate business processes, such as share issuance or HR updates, combining use of conditional content fields alongside electronic signature tabs. Content tabs can be filled in using a spreadsheet, which in turn could be integrated with a simple form-based process to create an efficient and user-friendly way for teams to process bulk amendments to day-to-day agreements.
Structured legal data and analytics
Electronic signatures can be seen as just one component of a bigger solution for contract data. The rise in adoption of electronic signature platforms overlaps with an increased interest in contract data analytics and contract management systems. Software can help companies to structure and manage data relating to legal obligations during the drafting and negotiation phase, and to organise contractual information post-completion. Alongside integration with established e-signature providers, contract management software might also allow for interactive questionnaires, automation, access to drafting notes and, in some cases, instructional videos. Analytics dashboards can help to surface trends in negotiation and cut the time required to identify and re-negotiate specific clauses across a body of contracts.
Current rates of new tech adoption: MS Office vs new solutions?
Giles Thompson, Head of Growth at the no-code document automation platform, Avvoka.com, says that he has seen an increase in live-collaboration on documents using commonplace cloud offerings, like Office 365 and Google Docs. He predicts that requests to negotiate contracts via online portals will become as ubiquitous and benign as being asked to sign a document via DocuSign or AdobeSign.
Will Lloyd, Chair of the Manchester Legal Hackers community group, and Legal Technologist at the law firm Addleshaw Goddard, also observes that legal teams are currently navigating a tug of war between document automation systems which seek to enhance MS Word features, versus those which require a shift away from the familiarity of MS Office.
There are interesting opportunities for drafting and analytics platforms to create greater transparency for lawyers and a better contract management experience. It will be good to watch how this area, alongside use of electronic signatures, develops in practice over the years to come, and which software solutions reach a sufficient network effect to create real industry change.
Can lawtech learn from translators and coders?
Taking a lesson from other fields where written knowledge is more structured, such as Trados for translation services, or code editors for software development, there seems ample opportunity for legal teams to create efficiency in drafting, negotiation and risk management, but only if there is enough openness to innovation and experimentation so that we can displace the tried and tested ways of doing things. With increased digital familiarity, it seems likely that legal practice is headed in this direction, and that there may well be interesting developments in the years to come.
Electronic signatures as the gateway to future automation and innovation
Electronic signature platforms provide a very simple way to take a first step in the direction of innovation and automation for many lawyers, whilst offering an opportunity to engage in the detail for those who are interested in furthering their knowledge.
As the choice of technology available to lawyers becomes more powerful, and as adoption increases, legal teams will need to cast an enhanced focus on process efficiency, and in particular on user experience design, to define how different software products come together to create a workable solution. This poses welcome challenges for lawyers to make legal documents more open and more accessible to a wider range of users.
Legal technology has created an opportunity for lawyers to create multiple ‘front doorways’ to legal documents. In this way, we are perhaps no longer bound by the fatalistic prescription of Sir Ernest Gowers in Plain Words, his 1946 classic text on clear writing. In a chapter entitled “A Digression on Legal English”, Sir Ernest concludes – quite sensibly for the time – that legal draftspeople must, “avoid all graces, and not be afraid of repetitions, while all the time keeping an eye on the rules of legal interpretation, and on the case law that concerns the meaning of particular words. No one can expect pretty writing from anyone thus burdened.” With the advent of chatbots and interactive drafting tools, not to mention the proliferation of knowledge concerning user-experience (UX) design for collaboration platforms, there is plenty of room for optimism that more and better solutions can be found to create accessible legal information.
In our further, and final, article for the Obelisk Legal Technology 101 series, we will explore what further can and should be done in order to optimise legal writing for ordinary readers. We also consider what role legal technology and design can play in creating more accessibility for a wider range of people who must rely upon, and comply with, the written law.
Perhaps electronic signature technology can truly be viewed as the gateway to much of this further innovation for a wider range of practitioners. If this is the case, it is certainly to be hoped that we have so far only seen the beginning of what is possible with user-centred design and accessible innovation in law.
About the author
Lisa is a Legal Knowledge Director, who has led on legal innovation and transformative projects within the UK magic circle and big4 accountancy practices. She works as an independent legal technology and knowledge management consultant through Obelisk Support and also runs a lawtech business at https://fractal.legal.