What to Consider When Contemplating E-Signatures
Executives from the top insurance carriers in the US recently heard legal experts Pat Hatfield, Partner, and Greg Casamento, Partner, Locke Lord LLP, discuss case law for e-signatures at the E-Signature Summit for Insurance Executives. Since the passing of the US Federal ESIGN Act in 2000, Pat and Greg have tracked how the courts have ruled on e-signatures and the now substantial body of judicial precedence. While the ESIGN Act leveled the playing field between electronic and wet ink signatures, it did not give electronic signatures special status. What Pat and Greg made clear was that a reasonably well-designed process supported by the appropriate technology can reduce litigation and compliance risk overall. Such a process supported by the right technology can generate admissible and credible evidence, and ultimately make it easy for a judge and jury to understand. When legal disputes involving electronic transactions arise, the same evidentiary rules and contract principles apply as in the paper world. Whether using a paper or electronic method, producing convincing evidence entails more than just presenting an authentic signed record of an agreement. It also requires demonstrating that the process used to establish the signer’s intent was fair, and complied with all applicable laws and regulations. It’s clear that courts recognize e-signatures, e-delivery and electronic records as legal. There are a few particularly instructive cases:
- Long v. Time Insurance Company, where the court ruled in favor of Time Insurance, validating the company’s use of e-signatures for health insurance contracts, with the evidence generated being deemed admissible in a court of law;
- Barwick v. GEICO, where the validity of an electronic signature (UETA law) was questioned;
- Labajo v. Best Buy Stores, where it was shown that a flawed process can expose a company to a class action lawsuit;
- Lorraine v. Markel American Insurance Company, where offering electronic evidence without laying the proper foundation can deem such evidence inadmissible, and thus an e-contracting business process unenforceable.
- Federal and industry e-signature laws and regulations should be met, including ESIGN and UETA, as well as any additional laws in the organization’s jurisdiction;
- Judicial precedence should be understood – delve into which scenarios have been addressed in court and the guidance those cases offer on the dos and don’ts;
- Rules of evidence should be known, and it’s important to understand what persuasive electronic evidence looks like. This includes record retention and privacy laws, and when evidence has and hasn’t been admitted;
- An e-signature software solution that is able to capture evidence securely and reproduce it easily in a court of law should be chosen.