Internet Newsletter for Lawyers
July/August 2005, by Delia Venables

Lawyers and Electronic Signatures
by Stephen Mason

This article outlines the forms that an electronic signature can take, considers the most popular form of electronic signature that is used by lawyers, and offers some thoughts on the future use of electronic signatures in practice.

The forms of an electronic signature

Most of us use electronic signatures every day. In the same way as manuscript signatures function to prove the intent of the signing party, so electronic signatures function to authenticate the sender. Electronic signatures affect lawyers just as much as they apply to clients. Below are the different types of electronic signature that are in use today:

i) The most widely used form of electronic signature is the act of typing your name into a document, as illustrated by the case of Hall v Cognos Ltd (Hull Industrial Tribunal 1803325/97). Cognos employed Mr Hall as a sales executive, and he was reimbursed for his expenses in accordance with the relevant policy, that stated all expenses over six months old would not be paid. He did not submit a claim on time. Mr Hall subsequently exchanged a number of e-mails between Keith Schroeder (his line manager) and Sarah McGoun from personnel, when in one response he eventually asked if the late submission was “OK with you?” and his line manager said, “Yes, it is OK.” The e-mails were signed “Sarah” and “Keith” respectively.

He inflated the claim, and he was dismissed without payment. The contract of employment stated that amendments or variations had to be in writing and signed by the parties to be effective. At issue was whether the exchange of e-mails between Mr Hall and his line manager varied the contract. It was determined that the printed version of the e-mail was in writing and signed, and constituted a variation of the contract, although the printed version was merely a copy of the original version in electronic format. This decision demonstrates that a signature typed into an electronic document is acceptable as a form of electronic signature. While this decision cannot be considered to be of any significance in terms of legal precedent, nevertheless it demonstrates that a signature typed into an electronic document is acceptable as a form of electronic signature. The line manager intended Mr Hall to act upon the exchange of e-mails, and Mr Hall relied upon the assurance made by the line manager. The inclusion of an employee from the personnel department in the negotiations served to reinforce the authority of the line manager to offer the variation of the contract of employment.

ii) The second most popular form of electronic signature is when a person clicks the ‘I accept’ icon to confirm that they wish to enter a contract when buying goods or services electronically. The signing party demonstrates their intention to enter the contract by clicking the icon. The Law Commission in paragraph 3.37 of their paper “Electronic Commerce: Formal Requirements in Commercial Transactions Advice from the Law Commission” December 2001, suggested that this form of signature is the technological equivalent of a manuscript signature using a cross, which must be right. This analysis is also in keeping with the decisions made by judges over the past two hundred years regarding the form that a manuscript signature may take. In English law, the validity of the signature depends on the function it performs, not necessarily the form a signature takes. Even if the act of clicking on an icon to order goods or services is deemed to be less secure than that provided by a manuscript signature, it does not follow that the reliability of the signature will affect its validity.

iii) The use of a biodynamic version of a manuscript signature, which uses a special pen and pad to measure and record the actions of the person as they sign. This creates a digital version of the manuscript signature. The file can then be attached to documents in electronic format.

iv) The scanned manuscript signature, used to send out marketing letters. The manuscript signature is scanned and transformed into digital format, which can then be attached to an electronic document.

v) The digital signature. A very simple explanation as to how it works, is as follows: a digital signature can comprise three elements, a key pair (a private key and a public key) and a certificate, which is usually issued by a third party such as a certification authority. When an electronic message is signed with a digital signature, the private key is used to associate a value with the message using an algorithm. The computer undertakes this task. The value, the message and a certificate, linking the key to the named person or entity, is then sent to the recipient. The recipient uses the public key to check the value is correct by ‘unlocking’ the value created by the algorithm. A computer undertakes the entire operation. The only action required of the human being (in theory) is to cause the computer to associate the digital signature to the message.

The reader will readily note the problem that affects every form of electronic signature: the recipient does not know whether the signature was affixed to the e-mail or document by the person whose signature it purports to be. This is the central conundrum of all forms of electronic signature, even the digital signature.

The role of electronic signatures in legal practice

It has almost become the norm for both solicitors and barristers to communicate between each other and between themselves and clients by way of e-mail. This has increased the speed at which a client is kept up-to-date. Solicitors send agreements to clients electronically, altering the document until the client is satisfied with the finished product. Barristers send an opinion or advice as an attachment to an e-mail, just as they might add supplementary questions by e-mail to instructing solicitors, who will then forward the e-mail on to the client. In every instance, the signature used by every party in the process is the name typed at the end of the e-mail.

Electronic signatures and e-conveyancing

Any form of electronic signature can be valid, but it does not mean that reliance on a particular type is necessarily prudent. As a result, it seems likely that the digital signature will be the form of electronic signature upon which e-conveyancing will be based. If this is the case, then a decision needs to be made as to whether to adopt one of two models:

i) A public key infrastructure (PKI), a term used to describe the various players that provide digital signatures. This comprises a registration authority, that register the user; a key generating authority that generates the cryptographic key pair (private and public keys), and a certificate authority, that will provide a certificate, linking the keys with the identity of the user. If the Land Registry adopts this approach, the law firm will be required to buy a key pair and a certificate from a certification authority (usually annually). The certificate acts to bind their identity to their key, for the benefit of the recipient.

ii) A closed community, where each law firm has a shared key with the Land Registry, which the Land Registry (or a third party on behalf of the Land Registry) issues a key pair and certificate to the law firm. When the law firm communicates with the Land Registry electronically, the Land Registry will accept the instructions from the law firm when the digital signature is used.

The Land Registry is keen to discuss the issues relating to this matter, and have taken numerous steps to engage the legal community in the discussion. Whichever model is used by the Land Registry, law firms will have to invest in much higher levels of security than they have hitherto employed, and they will also have to manage, store and retain the keys for significant periods of time. In addition, they will also need to buy additional insurance to cover the risks of unauthorized use of their digital signatures.

Electronic billing for law firms

It would be interesting to know how many firms are using technology to send out bills to clients. Many readers will be familiar with the well-known case of Goodman v J Eban Ltd [1954] 1 QB 550, in which it was correctly decided that a stamp could act to signify a solicitor’s signature on a bill. As Leigh Ellis demonstrates in his ‘Practice Note’ (e-Signature Law Journal, Volume 1 Number 2 91 – 92), signing a bill electronically is now a sound and perfectly acceptable use of technology. For example, Kaltons use the technology provided by Adobe Acrobat to send out bills to clients. A bill is exported from the time recording database into Adobe Acrobat pdf, and a partner uses the digital signature facility to sign the bill with a digital signature. This is not the only type of technology that is capable of performing the same function, but it is a good use of the Adobe Acrobat software.

Current technology

The digital signature technology, the subject of so much discussion during the turn of the century, has failed to take off because of its complexity, cost and the additional burden of maintaining the keys from year to year. In addition, it does not serve any additional function than a name typed in an e-mail or the click of the ‘I accept’ icon. Millions of contracts are entered every day by way of the ‘I accept’ icon or the typed signature, and there are very few cases in which either of these forms of electronic signature are challenged. The issue for the replying party is to ensure they have the ability to prove the use of the signature to a sufficient degree that they can rely on it.

Of greater interest to lawyers is how to provide for the confidentiality of the contents of an e-mail or documents attached to an e-mail. Cryptographic products are rather too complex for most organizations, and lawyers, because of their cost and complexity, have not bought many of the products that have been brought to market. A present, a law firm or barrister will either offer a client the option of having all correspondence encrypted when it is sent electronically, or may simply state that they do not provide for the encryption of documents sent electronically. Invariably, the vast majority of clients are not in a position to support encryption themselves, and so decline any offer to encrypt in any event. However, lawyers might consider re-assessing their position with respect to providing for the confidentiality of documents sent electronically by such products as that sold by Argelcom Limited (see www.argelcom.com) and by Security and Standards (www.secstan.co.uk).

Conclusion

The majority of lawyers use electronic signatures in their daily business, and the courts are now encouraging the use of e-mail, as demonstrated by a new ‘E-mail Protocol’ that sets out how parties may communicate by e-mail on a number of matters with the Chancery Division of the High Court of Justice at the Royal Courts of Justice. It applies with effect from 18 April 2005. The types of documents which can be sent by e-mail are skeleton arguments, chronologies, reading lists, lists of issues, lists of authorities and lists of the persons involved in the facts of the case sent in advance of a hearing.

In addition, solicitors and barrister specializing in criminal matters are encouraged to take up the offer of the CJIT (Criminal Justice Information Technology) secure e-mail system (see www.cjit.gov.uk).

Two points appear to stand clear in the use of networked communications by lawyers. Firstly, the voluntary use of complex digital signatures has not taken off, and probably never will do without some form of compulsion.

Secondly, lawyers should reconsider the use of cryptography to provide for the confidentiality of the documents they send to clients. The technology is reaching maturity, in that some products are now very easy to use.

Stephen Mason is a barrister with an interest in authentication and identity as it affects our use of information technology. He is the author of Electronic Signatures in Law (LexisNexis Butterworths, 2003), Networked communications and compliance with the law (xpl publications, 5th edn, 2005) and the editor of the e-Signature Law Journal.

Email stephenmason@stephenmason.co.uk.

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