By Dan Puterbaugh, director and associate general counsel at Adobe's Document Cloud Division
An electronic signature is like any other signature: it binds an agreement. But while legal, procurement, and sales operations professionals understand this –– many employees who sign agreements do not. Some signers aren't even aware a corporate signing policy exists, let alone what it states. As businesses transition their workforces toward the informed use of e-signatures, it has become critical to ensure that all the parties to an agreement understand corporate policies and how they apply to electronic signatures.
Which clicks count?
Fast Company published an article with a title that made in-house counsel around the country weep: ‘Is Your E-Signature Making You A Liar?’
Researchers asked people to read a piece of text and attest to the amount of time it took them to complete the task, with a monetary reward associated with a longer reading time. Those who signed electronically were more likely to lie about the time they spent reading. The test seemed to prove that people don't imbue e-signatures with the same gravity they would an ink signature, but I'd argue that the vast majority of people understand that on the scale of seriousness, an artificial test is at the low end and a contract is at the high end — the highest level possible, in fact. However, the results do show that organizations have much work to do in educating their employees.
One reason people might not understand the binding nature of e-signatures is that they're so easy to use. Thousands of designers and engineers have labored over twenty years to make e-signatures simple and lightweight. The complicated gears and knobs that add the security and aid the workflow are hidden — just click and an agreement is made. And that's as it should be; no one would argue that users want more complications in their software. But users should have an idea of what's behind the curtain: identity, encryption, audit trails, and other elements that tie that little click back to "Roger in Product Marketing." People need to know that the little click that binds their company to an agreement is not the same as the little click that lets them vote on who wore the best gown at the Oscars.
Habits are hard to break
The difference may seem obvious, but the people responsible for their company's legal obligations should take nothing for granted. Signing policies need to be broadcast throughout an organization and should include not only who can sign and up to what dollar amount, but also how to use the features of e-signature solutions properly so that the integrity of agreements is maintained.
For instance, a common mistake occurs when an employee gets an email request to sign an agreement. For whatever reason, that employee wants someone else to sign the agreement. But instead of delegating that duty through their electronic signature system, the employee simply forwards the email itself. That forward disrupts the audit trail that so many systems rely upon. If there is ever a need to trace that agreement back through its workflow, the workflow will likely end when the forwarding began. Employees don't know this — why should they? They're not thinking about the mechanics of electronic signatures when they sign an agreement; they're thinking about the tangibles the agreement will provide. They're thinking, "I signed for a new coffee service — finally, we can have cappuccinos."
E-signature solutions usually include a button called something like Forward, or Assign, or Delegate for the exact purpose of preserving a verifiable audit trail of the document's journey. Employees don't need to become experts on the gruesome details of how these trails are preserved, but they should understand that e-signatures live within a system.
Employees also need to understand what happens after an agreement is signed. Paper contracts are placed in filing cabinets and saved forever, because even people who have never been involved in a contract dispute know they might have to produce the hard copy of an agreement as evidence in court. The electronic version of the eternal filing cabinet is the hard drive. Employees tend to download copies of their signed agreements to their own computers thinking they're acting responsibly, but a hard drive is not a filing cabinet. Hard drives get broken, or dropped in the bathtub. They get wiped by employees who are leaving the company. Files get named badly and become unsearchable. Lots of things can go wrong. Organizations that use or plan to use e-signatures need to set up their solutions' archiving to automatically save copies to their servers. Employees will still download copies to their hard drives, but that won't matter; the organization will have the original, protected by all the data security practices that safeguard their business–critical systems.
Transition your employees' thinking
We're in a transitional period, but transitions come to an end. In It's a Wonderful Life, George asks for twenty-four hours to think before he signs a contract with the evil banker. He knows that his signature is an unbreakable commitment (spoiler alert: he doesn't sign). When the vast majority of people understand that an e-signature is just as binding as an ink signature, we'll start seeing films where our hero hesitates in front of a computer screen, a finger trembling over the Sign button. That's when we'll know we've done our jobs and aligned our employees' thinking to the reality of modern business.
For further reading, download the ACC Docket article “Sign Here: Electronic Signatures and the In-house Counsel” by Rachel Stoermer, senior corporate counsel at DocuSign. Learn how to best instruct clients on taking advantage of the numerous electronic signature tools available that enable your executives to sign from anywhere they can connect to the Internet.