Top tips for rolling out e-signatures

Covid-19 has thrown the standard driving manual out of the window at a speed no one could have predicted, and to enable businesses to continue to operate in lockdown, digitalisation has jumped into the driver’s seat and pressed the accelerator pedal firmly to the floor. E-signatures have a key role to play in that digitalisation. But if your company isn’t in the e-signature fast lane yet, what are the issues that you need to think about? 1. Are e-signatures suitable? There are restrictions on using e-signatures that apply to all types of transactions. While less likely to apply to companies registered under the Companies Act 2006, it is still a good idea to check early on that they won’t impact on your proposed use of e-signatures. For example, using an e-signing platform is not recommended for a party that executes by affixing a common seal because the validity of e-sealed documents is uncertain and it is not market practice to do so. It is important all parties to the transaction, including any lender providing finance, consent to the use of e-signatures. If your deals are usually financed, it would be prudent to speak to your lenders and gauge their appetite for e-signatures. If the place of signature or location of the document is important, perhaps for tax reasons, it may be preferable to avoid e-signing. 2. Map out your signing process While an e-signing platform will do away with the lockdown headache of printing, signing and getting the physical document into the right hands, you still need to establish an e-signing process. We suggest that you give thought to the following issues: Who are your authorised signatories? E-signing platforms operate on the assumption that an e-signing request e-mail should be actioned by the recipient as soon as possible and a delay in signing will often trigger an automatic reminder e-mail. It is very quick and easy to e-sign a document, but the authorised signatories will generally receive documents for signature for different transactions in separate envelopes and they must be prepared to action those requests promptly. It is not possible to delegate e-signing to administration staff; the authorised signatories must apply their signatures to the documents themselves. They will not need to create an account with the platform provider in order to do so. If your company enters into a high volume of transactions and therefore operates a signatory pool, how will you manage which authorised signatories receive e-signing requests? Who signs first? Where two authorised signatories are required for valid execution, the e-signing process can be tailored so that they both receive the request at the same time or in sequence – consider which approach would best suit your company. Internal approval If the chosen authorised signatory isn’t responsible for the transaction then they will need to see that appropriate internal approvals have been given. The best way of doing this is to include in the electronic envelope the usual approval paperwork that would accompany a wet ink signature request. Record keeping Larger organisations will want to keep a record of documents that have been e-signed, and e-signing platforms make this easy to do provided a system is put in place. Signatories will automatically receive access to the completed documents and the accompanying audit certificate, but the most efficient and reliable way of collating them is to add a “CC” function to the end of the e-signing process so that they are automatically e-mailed to an administration inbox following completion. It is usual for e-signing platforms to have a retention policy so that completed documents and their related certificates are deleted from the platform after an appropriate period. Before that happens, an administrator should download them and store them within the company’s own electronic storage system if they have not already been logged. 3. Choose the right licensing arrangement for your company In England and Wales most documents are signed using “standard” or “simple” electronic signatures. AES (advanced electronic signatures) and QES (qualified electronic signatures), which require the application of additional security checks and attract a higher charge, are not currently widely used. While the Land Registry has expressed an intention to permit the use of QES in the future, for the time being they do not need to be considered. Typically, e-signing platform providers offer two main licensing models for standard e-signatures – one based on a specified number of users who can send unlimited envelopes, and the other allowing an unlimited number of users but with a cap on the number of envelopes that they can send. Law firms often favour the second model as envelopes are likely to be created by most of their staff, but a property company may only require a limited number of staff to create and oversee envelopes and the first model may suit its needs better. However, you may be surprised by the number of different teams and departments who want access to e-signatures, including HR and procurement. So don’t assume that it is only a tool for getting property transactions done and consult widely before negotiating terms with a provider. For some e-signing platforms it is possible to apply “access authentication” for each recipient to provide an additional layer of security. The most commonly used option (and a requirement for documents that are registrable at the Land Registry for all signatories and witnesses) is a six-digit one-time code which is sent to the recipient’s mobile phone as a text message by the e-signing platform. This functionality is usually purchased as an add-on. 4. Give extra thought to witnessing If your company typically executes by way of a single director who signs in the presence of a witness, be aware of the specific requirements that apply. The witness must be physically present and able to see the director apply their signature to the document on screen; witnessing remotely by video call is not permitted. The witness will then receive an e-mail inviting them to sign and complete their details in the document, and this must be done soon afterwards on the same day. Different e-signing platforms offer different functionality in respect of witnessing and you should ask what “document visibility” options are available. Will the witness see all the documents in the envelope, just the documents that the director is signing or perhaps only the pages the director is signing? Will they receive access to the documents following completion? This is a particularly important consideration if the transaction is confidential and the witness is not a company employee. 5. Complying with the Land Registry’s additional requirements The Land Registry announced in July 2020 that it would accept e-signed documents for registration subject to certain conditions set out in Practice Guide 8: Execution of deeds. It further refined its guidance on 7 September 2020 and most recently on 15 February 2021. A key requirement is that all parties must be represented by a “conveyancer” and a “conveyancer” must set up and control the e-signing process. An in-house solicitor who has a practising certificate will meet the Land Registry’s definition of a conveyancer and could therefore oversee the e-signing of a registrable document. If you have instructed a law firm to act for you on a transaction, however, they will prefer to control the e-signing process themselves. And if your solicitors don’t use e-signatures, challenge them on this. Do believe the hype Are e-signatures really living up to the digitalisation hype? Yes. Collectively Womble Bond Dickinson and Herbert Smith Freehills have sent out more than 5,000 electronic envelopes in the past 12 months with 68% of documents completed in under 24 hours. Speeding up the final signing stage of a transaction and ending the paper chase has supported our clients while they work remotely in the uncertain business environment created by Covid-19. Who wants to be left in the slow lane? An e-signature success story Early in 2020, British Land onboarded an e-signing platform as we started planning for the prospect of remote working. When lockdown came we worked closely with our partner law firms to design robust signing protocols around the use of e-signatures. Our ability to roll out e-signatures during this challenging period meant our deal pipeline could continue without any delays and the benefits of our investment in this technology became very clear. We have faith in the integrity of e-signatures, our signatories love the ease and convenience of them and our transactions complete more quickly without the expense of couriers. With the creation of clear audit trails and immediate delivery of completed documents straight into our inboxes, it’s easier for our legal team to keep its finger on the transactional pulse. There’s no going back. Paul Edwards is head of legal at British Land Katherine Crowley is the real estate practice development manager at Womble Bond Dickinson (UK) LLP and Kathryn Oie is an of counsel who also supports the knowledge function within the real estate practice at Herbert Smith Freehills LLP. Picutre © xuuxuu/Pixabay