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The Legalities of E-Signatures and Why your Business Needs an Attorney

Viewing the Electronic Signature from A Legal Perspective

Many US business owners know it is legal to use an electronic signature to approve documents, but only a few understand the legal facts behind its use. This is mainly a concern because the consequences of failing to act by the law may leave you vulnerable to serious lawsuits—some that may threaten to ruin your bottom line. E-signatures have been popularizing over the past decade, but the dawn of coronavirus and its "keep distance" effects marked a special moment for it. But as with any new technique, the hurried implementation may lead to serious consequences in the future—especially in cases where businesses do not act in compliance.

An Update on E-signature Regulations.

In response to the pandemic, both federal and state-level policymakers began considering an amendment (on March 20, 2020) to authorize or further speed up the use of e-signatures. The proposal also covered the use of e-notarizations and remote notarizations (RONs) for business transactions. Under existing regulations, e-signatures and e-notarizations are extensively controlled by federal, state, and county laws. The ESIGN (Electronic Signatures in Global and National Commerce) Act of 2000 applies when an e-signature is used at the federal level. According to the ESIGN Act, e-signatures carry the same legality as a wet or hardcopy signature. At the state level, the Uniform Electronic Transaction Act (UETA), which also considers e-signatures as legally-binding, swings into action. The same Act is in effect in the District of Columbia. At the moment, almost all states, but for Illinois, New York & Washington, have implemented the UETA. And now, Congress is working on a bipartisan plan to allow RONs at the federal level. The proposal dabbed the Securing and Enabling Commerce Using Remote, and the Electronic Notarization Act of 2020 (SECURE Act) will allow all US notaries to initiate remote notarizations (RONs). It will further set laws to streamline cross-state transactions. Under the current legal arrangement, every state is free to establish its RON standards. As we speak, states like Connecticut and New York have taken advantage of executive action to introduce the use of RONs. The two states now permit RON payments through audio-video chat platforms like Skype, FaceTime, etc. Florida has also followed suit to authorize RONs thanks to an order from its state's Supreme Court. In the meantime, the state of Georgia is working on plans to implement similar policies.

Understanding Electronic & Digital Signatures

So what are the four major components of the ESIGN Act? (1) The individual signing the doc must do so with intent and at free will; (2) Both parties must agree to use electronic signatures for the contract or transaction (3) It would help if you had a way to validate that the intended cosigner is responsible for the signature on the doc (4) Both parties (and/or the legally permitted) must have access to a copy of the doc if it matters. Remember to look into the following when using e-signatures for your deals. Use the PDF format for hassle-free dealings; Your contract is not without blemish, and even if it is, your client will certainly need one or two amendments to its terms and conditions. Using PDF eases the process of editing and making adjustments (on the same doc) as it is the universal document format. 1.

Learn the Jargon.

Is there a difference between electronic and digital signatures? Well, if there is, then it's a very thin line. Electronic signature is the umbrella term for signing a doc using a computer program or app, instead of traditional methods like ink. A digital signature, on the other hand, is a more complex definition, which in most cases, involves extra measures like a stricter verification process for the signer, and encryption to preserve document integrity. Before implementation, both parties must familiarize themselves with these terms and agree to the type of signature in use. 2.

Use wording that favors the use of E-signatures.

State clearly in your contract that by signing the document, both parties understand and agree to the use of an electronic or digital signature, and consider it legally binding. 3.

Email directly to the signer.

You want to email the signer directly for two critical reasons (1) document confidentiality and security, and (2) timely reviewing and approval by the client. Do not use a company address or a shared email!

The Salient Features of a Functional E-signature tool

Getting up to speed with your tools will help you get the most out of it and avoid operating out of compliance. So what are the features that matter most to an e-signature tool? 1. Hassle-free signing: You want a user-friendly platform that will help convert prospects to clients. Your tool should allow a signer to add a signature in 2-3 steps. 2. Compatibility with Mobile and web devices: Many of your clients will want to sign through tablets and smartphones. Use a tool that accepts both platforms to meet the needs of both. 3. Compliance with any Industry-specific rules: Some industries have stricter E-signature laws. Confirm if your signing tool is in accordance. 4. Auto-reminders: automatic reminders asking one to sign a doc can help keep clients on their toes. 5. Doc Expiry Dates: a tool that allows you to set doc expiry dates can keep a signatory worried knowing their deal may expire if they don't act in time. Many other features matter, but these are the pillars to a reliable solution. The shift to digital signatures may not be as simple as it sounds, but it is indeed possible. Businesses must go step by step, and remember to involve their attorneys and clients in the shift to ensure an organized friction-free transition.

Steps to Implement E-signatures.

1.

Analyze Your Business Needs.

The best way to use an electronic signature generator on a large scale is to consider one solution for all their needs. You want to provide a standard e-signing tool to accommodate all the different parties, i.e., your staff, clients, vendors, and associates. You must be strict about the method you use because of legal compliance matters involved in signing electronically. 2.

Iron out Legal and Compliance Matters.

A company's attorney should look into the permissibility of electronic signature use in your sector and analyzing any local or state laws. US business may need to look at the following regulations, the E-SIGN Act, the Uniform Electronic Act, and other laws like the eIDAS Act (of the European Union). To keep your business safe from costly lawsuits, implement a solution that preserves client documents and guarantees the personality of the signer as well as signature authenticity. 3.

Getting a Reliable API Integration.

Depending on your company's case, you must consider other technical needs, such as an API. Most electronic signing solutions have integrated third-party APIs with reputable service providers. While these may serve primary e-signature uses, if legal matters are a concern, you must request for reliable API support from your e-signature solution provider. The best approach is to discuss a deal with the API provider that works with your e-signature platform or any other vendor willing to enter the agreement. This allows the API and the electronic signature generator to work in the background enabling all company stakeholders to sign safely in the cloud. 4.

Which Solution for Your Business: Cloud-based vs. Onsite.

Again, businesses get caught between onsite and cloud-based solutions. Some people would love to favor one over the other, but both are beneficial and legal solutions. No wonder some providers now offer both remedies for businesses to choose based on their needs. A cloud-based electronic signature generator is accessed online. You sign up for an account where permitted stakeholders can log in and add an e-signature online. An onsite solution comes in the form of a software-as-a-service or SaaS. So you will have PC software and an app that allows you and your stakeholders to accomplish all your signing tasks.

Consider the following factors when picking a platform;

• Your signers' location (whether they'll be signing onsite or remotely. • Your Security and compliance needs
• Your Budget
• How you plan to implement the solution you go for The best platforms prioritize security and legal matters.
• The capability to support PKI-based digital signatures
• The level of authority the vendor gives your over Encryption keys
• Compliance needs through standards such as ISO 27001
• Multi-factor validation is also essential in augmenting security In a nutshell, consider a solution that features API support standard protocols, direct data transmission, multi-factor validation, and enough support.

Why You Need a Business Attorney and the 7 Questions to Ask before hiring One.

Business owners consider an attorney an afterthought until they have a serious lawsuit to address. Yet these professionals take you through many legal processes, from legally establishing your firm, to leasing working space, more so if you are new to the world of entrepreneurship. Think of it; where would you go if someone filed a lawsuit that threatens to sweep away your investment? Attorneys matter in matters of electronic signature because while this method is perfectly legal, regulations vary from state to state, and by industry/sector. The critical role of an attorney is to ensure you follow all rules and avoid hefty lawsuits. So they play a protective role rather than wait for trouble and move in to defend you. If you decided to get a business counsel for your enterprise, here are some questions to ask before signing a deal with the attorney. 1.

How much for the service?

Price is a bone contention for the business owner. You don't too much extra cash waiting to be thrown on an attorney, so charges become a sticking point. It is an excellent idea to negotiate a fixed-fee deal instead of an hourly rate. Experienced lawyers know how to go by the book and how much time it may take to fix a matter and can accurately price it beforehand. Unfortunately, a flat fee may apply if you have a complicated lawsuit. It is vital to consider price first because there's no point wasting your (and the attorney's) precious time if their price doesn't fit your budget. 2.

Do they need a down payment?

Most attorneys ask for some down payment as a retainer. Make sure to ask them whether this money is refundable (if unused) or not. Inquire about the terms and conditions of the down payment. 3.

How long has the attorney they been in this field of law?

What are their winning rates? How many such cases have they handled? Have they ever lost this type of lawsuit, and under what circumstances? When did they last time updated themselves on new case law? Such questions can help you decide if a business attorney matches your needs. 4.

What will be your job as my attorney?

A lawyer's job is to identify and preserve your claims, ensure you meet legal timelines and deadlines, understand omissions to the rules, present pieces of evidence, and arguments to back your claims, help in the cross-examination of witness testimony, and discuss the best deals (in your favor) as a settlement. 5.

Will everything we discuss stay confidential?

Attorneys should be familiar with all the personal secrets that are vital to solving your case. Ask them if you can trust them on that and if there are any binding contracts (in writing) about it. Give out all facts to the attorney so they can assess the situation accurately. Attorneys are good at keeping information confidential, even if the discussion doesn't end in a lawyer-client relationship. 6.

Have they owned a business before?

Though this point may not be a factor to look at, wouldn't be an added advantage to work with a business counsel who has been or is a business owner? The truth is; these people are experienced in both legal and financial matters, and they can relate to your failures based on past experiences. But this doesn't mean that attorneys who haven't been entrepreneurs aren't competent. It only means you will have someone who can relate to your situation. 7.

Can you interview them for free?

Hiring an attorney is a lengthy procedure that requires hours of discussions to know if the candidate matches your needs. While some allow clients to question them at no cost, most of them charge an hourly rate or small consultation fee to see them on an interview capacity. Plus, attorneys are used to having many people come around, ask questions, and get info for free without any intention to hire them, so more and more of them are shifting to requesting consultation fees. Consult upfront to find out if you can vet them for free. 8.

Ask about their background?

Clients deserve to learn everything about their attorneys. Ask about their background. Examples of perfect questions include: Where did they study law? How did they end up where they are today? And why they chose this line of service? 9.

How long have they served in your locality?

Years and years of service make an attorney more experienced and well-placed to tackle many legal issues in the community. Choose a business attorney with a reputation of helping the businesses in your area weather their storms. Remember, laws differ from one state to another, so you want someone familiar with your state's business regulations. Plus, you need someone from your area because you will need to consult them from time to time. 10.

Who will work on your case, and will they go to trial?

Some lawsuits are long-term and very engaging that your attorney may need to outsource the job to some staff. Be sure to inquire about it upfront and whether another attorney or staff will take care of specific tasks. Inquire about their credentials and experience. Also, ask if the attorney can go to a trial. Some attorneys avoid prosecution by attempting to settle the case at any cost. Be sure to question their trial experience beforehand, especially if you need someone to help you with a lawsuit. You stand better chances of winning cases if you have someone with years of experience on your side.

Final remarks

You want to implement e-signatures, but you'll need to draft a well-thought-out plan before you start anything. Getting up to speed with the federal and local electronic signature regulations is an excellent place to start. This is also the time to involve a business attorney. It can be challenging to single out the right business counsel for your needs, but a smart idea is to hire an expert that understands and specializes in your sector. It can take from weeks to months of research to get attorney services that are not only cost-effective but also efficient.

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