My Ongoing Experiment with Digital Signatures

November 9th, 2007

A few weeks ago Dave Winer posted a screed about the complexity of the VC financing process. One of his points was that legal transactions rely on the fax machine- that unglamorous item of 1980s technology- to an inordinate degree.

He’s right. It is a cumbersome process: email documents, open attachment, print, fax, (sometimes mail originals) repeat.

There has been a law on the books in the U.S. since 1999 called E-SIGN that says electronic signatures are just as valid as manual ones, provided a few simple requirements are met. So why are people still using fax? Are lawyers simply luddites?

Perhaps, but I decided to try out some digital signature services- if nothing else to see why few people ever talk about them. Since I really don’t like reviewing products I am not going to name the services I tried, but instead to make some general observations based on the handful of transactions I have used them for.

People aren’t Ready for “Pure Digital” Signatures
Under E-SIGN a “signature” can consist of a digital stamp in the footer of a document with the date and some identifying information (such as an email address). A sample is below.

In practice this does not work for humans. I used this format in one transaction and the exact words of the opposing counsel were “I’m sure it is legally binding but I don’t have time to look it up”. This format isn’t required by E-SIGN, of course- one of the other services uses a font style that looks like a signature and puts it in the “right” spot in the signature block on the document (see below).

This is a seemingly small thing that makes a world of difference.

Fax “Just Works”
One of the services let me add nifty “stickies” to the signature blocks in my documents and when it worked scrolled signatories through the documents to just the right spots and collected all of the needed information beautifully. The problem was that it didn’t work reliably. One signatory couldn’t open the “digital envelope” containing the file at all and I had to resort to paper and fax. The whole thing also only works in Windows and requires a desktop download, so I could only use it from one computer (and that with Parallels installed).

Fax, on the other hand, uses tried-and-true technology and only needs to be compatible with the phone line. Low tech and the darn headers are ugly, but the process is effective and doesn’t require much thought. I like to think, but not about how to send my signature pages out.

I Still Want a Digital Signature Facility
I said previously that I would very much like a digital signature facility that I can route documents through as an adjunct to- and probably eventually as a replacement for- the manual pen/paper/fax. I still do. The systems need some tuning, but they will get there. The founder of one of the services in particular has been endlessly helpful to me in my experimentation and I hope he keeps at it until he gets the system down. It will work eventually, it’s just going to take some time and iteration to get it to “just work” as smoothly as fax does at its best.