Your best-laid plans of going paperless come to a screeching halt when you need to get someone’s signature on a document. That process typically involves printing the document, signing it yourself, faxing it to the other party, and waiting for them to print, sign, and fax it back—where it’s printed yet a third time and filed away in a cabinet forever.
It’s an antiquated regimen. It’s busy work. But there is a better way.
Electronic signature schemes have become big business. In fact, the e-signing sector is on track to grow north of $5 billion by the end of the decade, according to DocuSign CMO Dustin Grosse. E-signing tools represent a high-tech and much-needed response to the vast inefficiencies of dealing with physical signatures.
While systems vary from provider to provider, the general idea behind them is the same. You upload a document—Word, PDF, or even an image file—to an online service, then tag it with special annotations where signatures eventually need to go. The service sends this marked-up file to your specified recipients, who then “sign” it with a few clicks, either with stock cursive fonts or with a scrawl they draw using their mouse (or a finger, using a tablet) on the fly. When finished, the signed file is sent back to you, mission accomplished.
Users are signing e-contracts in droves. EchoSign says it is now processing 1.5 million documents a month, and that number is going up.
Is this actually legal?
It sure sounds fast and convenient—and it beats the heck out of dealing with registered mail—but are e-signed contracts legal? Will they hold up in court the same way an ink-stained piece of paper will? For the most part, whether you’re a business generating digital documents to be signed, or a consumer signing them with a mouse click, the answer is a definitive yes.
The U.S. government actually took the biggest step of resolving the legal issues of e-signatures back in 2000 with the ESIGN Act, which gave electronic signatures the same legal weight as handwritten ones. State law, for the most part, has followed suit in recognizing their validity.
As Louisiana attorney Andrew Legrand notes, in that state “in order to constitute an electronic signature, the electronic mark must be 1) made by the person with 2) the intent to sign the record. It’s not much different from a handwritten signature. Essentially, it’s not the actual mark but the meaning behind the mark that’s important.”
Are e-signatures good enough for everything? Almost. Legrand says, “The only documents I keep originals of are wills and promissory notes. These are the only two documents that I would be worried about only having digital copies. They’re just too important.”
How seriously do the courts take electronic signatures? Says Legrand, “It’s important to recognize that federal judges use digital signatures on all their orders. As you may or may not be aware, these courts are paperless. When a judge ‘signs’ an order, they use PDF software to place an electronic stamp of their signature onto the order. Would the federal courts be using electronic signatures if they thought they carried any less weight than a handwritten signature?”
Indeed, most courts have backed that up with rulings that e-signatures are just as legit as ink ones.
But who’s doing the signing?
Aside from a few key legal documents—if you’re finalizing your prenup you’ll probably want it done on paper—most contracts can be safely dealt with via electronic means. The exception is anything that requires notarization.
Indeed, a signature isn’t just a mark that says you agree to the terms of a contract or financial transaction. It also serves to verify your identity—that’s why you have to sign credit card receipts, after all. But in many of these cases, identity isn’t really that big of a deal. In cases where it is—major financial transactions, business operations, or legal filings—a notary is required to ensure that you, the person signing the document, are actually who you claim to be.
That’s a problem with e-signing. To date, electronic signature services haven’t come up with a great alternative to the notary, which remains an archaic and time-consuming throwback that will likely be with us for decades to come. For now, in many high-dollar transactions, e-signatures now co-exist with physical ones—and in some cases you’ll find you have to sign a document both ways. Try getting a new home mortgage and you’ll see what I mean.
E-signatures are finding a home on all manner of business documents. From simple service contracts to complex real estate transactions, electronically signed documents are now becoming standard operating procedure.
Cheronn Collins, who operates a photo booth rental company in Washington, DC, says she’s used electronic agreements to close 30-plus rentals to date. “Thus far,” she says, “I have not received any negative feedback from my customers.”
If you have a document that needs signing, you don’t need to cobble it together on your own. While you technically can send someone a PDF or Word file and ask them to annotate it with a mouse-drawn signature, it may be legal, but it’s a clunky way to get the job done.
A variety of cloud-based services have popped up to help you take advantage of the rise in e-signing, making the whole process simple and adding extra features that make contract management easier, and completely online. Many services even offer mobile apps that allow recipients to sign via fingertip on their smartphone or tablet (especially handy for in-person dealings). Pricing may look like it’s all over the place, but most of these services offer a $20-per-user-per-month plan designed to cover small businesses. A basic, five-documents-a-month free trial to get a single user started is also the norm.
Here are the major players in e-signing, and here’s how their tools work.
A major service provider to the real estate industry, Google-backed DocuSign is a straightforward and feature-filled service that any business should find simple. Upload files to DocuSign (DocuSign puts your files in “envelopes” that you can send as a group), then drag and drop signature boxes onto the documents where you want those autographs. DocuSign then emails the documents to the recipients you specify. You can also set reminders that prod your recipients to e-eign, and set documents to expire if they haven’t been signed in a timely fashion. A dashboard lets you keep track of all your outstanding and completed contracts. iOS and Windows 8 tablet versions are available. Plans range from free (very basic service) to $20 per user per month.
Acquired by Adobe in 2011, EchoSign looks and acts a lot like DocuSign, and is comparable to it in most ways. You upload documents, set signature locations (or just specify one signature at the end), and send contracts via email. A simple dashboard lets you track the status of all outgoing and incoming contracts.
A couple of interesting features in EchoSign include the ability to incorporate faxed signatures for recipients who prefer to sign by hand, and an extra layer of verification that lets you require the recipient to enter a password you provide or other personal information, such as the last four digits of their Social Security Number. Naturally, integration with various Adobe products makes this an appealing option for PDF-centric shops. iOS and Windows 8 tablet versions are available. Plans range from free (very basic service) to $399 per month.
This somewhat simpler service isn’t as pretty, but Sertifi has most of the basic features you need in an e-signing system if the two major players above aren’t to your liking. Documents can be signed fully electronically, or printed, signed, and faxed. You won’t find any fancy dashboards here, but files can still be tracked through Sertifi and are archived on the site. Plans range from free (very basic service) to $199 per month.
Notable as a somewhat cheaper alternative to the above ($14 a month gets you unlimited sending for a single user instead of the usual $20), RightSignature has all the features of its more expensive counterparts, letting you set field locations for signatures, initials, and dates on complex contracts and specify when contracts expire—though all signatures have to be drawn by hand instead of typed.
RightSignature also includes an online form builder, which lets recipients fill out more detailed contract information (phone number, address, and so on), handy if you’re looking to use your e-signature service to generate lots of boilerplate documents that need signatures, such as membership agreements for a gym or rental damage waivers. A dashboard is included. An iOS version is available. Plans range from free (very basic service) to $49 per month (unlimited service for 10 senders).
Christopher Null is a veteran technology and business journalist. He contributes regularly to TechHive, PCWorld, and Wired, and operates the websites Drinkhacker and Film Racket. Disclosure: He also writes for Hewlett-Packad's marketing website TechBeacon.