6 tips for using electronic signatures

This article was current at the time of publication.

While there are still instances where only a “wet ink” signature is allowed, constraints imposed by the COVID-19 pandemic have seen electronic signatures become more generally accepted and forced laws to adapt to the trend.

Like many widely used technological innovations, platforms that enable electronic signatures have become a vital business tool. 

Some larger organisations understood their potential early and have been using them for years, but it wasn’t until COVID-19 that they became more broadly embraced.

What the law says about e-signatures

In New Zealand, the use of e-signatures is more clearly governed than in other jurisdictions such as Australia, where myriad laws apply depending on territory, state and federal legislation.

“I think I’m right in saying that we were somewhat advanced compared to Australia in this area in terms of the legal side,” says Rick Shera, partner at Auckland-based Lowndes Jordan.

“The Electronic Transactions Act was put in place in 2002 and while it has since been repealed, provisions for electronic signatures have been included as part of the Contract and Commercial Law Act 2017. 

“Basically, what it says is something which requires a signature can be effected by an electronic signature as long as three things are true: the signature can be identified as that of the person giving it, it signifies their approval of whatever they’re signing, and it is [appropriately] reliable as in the circumstances for which it’s needed.”

Security measures for dealing with e-signatures

Antoine Pace, partner at Gadens in Melbourne, says security has improved with the ongoing development of user-friendly platforms designed for electronic signatures. 

“There are now electronic signature platforms in place that will provide an audit trail of transaction data to help assure users that the person whose signature is on a document is likely to be the person who signed the document,” Pace says. “This includes data evidencing the time and date of signature and the IP address and approximate location of the computer used to affix the signature.

Shera notes there’s also an important difference between electronic and digital signatures, raising potential security issues.

“From a practical perspective we’re seeing a lot more interference with email systems,” he notes. “I think that presents a danger for electronic signatures exchanged by email, which has been the traditional way we’ve done it. 

“Security – or lack of it – with emails is something we need to start to think about in terms of whether that should be an acceptable way of exchanging signed documents,” he believes. 

6 tips for accounting practices

1. Determine when e-signatures can be used and if unsure seek legal advice.
2. Develop an e-signature policy, procedure, and practice guide – outline the circumstances in which it is acceptable to use e-signatures with clients and how clients will be identified remotely.
3. Determine which e-signature and videoconferencing software to adopt by ensuring that the least technically able person in your practice has the skills to also use it.
4. Check the security of the software – is there a dedicated compliance team and how does the platform meet requirements in different jurisdictions?
5. When working from home, make sure you can maintain client privacy – if there are other people around, use a headset and find a private space to conduct calls and videoconferences.
6. Develop a safe custody policy for document storage. Do you print them out? Are you going to save them to a specific drive? What is your process and policy regarding where things are stored for the years ahead? How are they backed up and where?

Source: Kimberley Martin, Director at Worrall Moss Martin Lawyers

Read 6 tips for using electronic signatures (Australia).