With electronic signatures entering widespread use, the regulated legal professions are seeing their processes turned upside down in a phenomenon referred to as “Legal 4.0”.
But the transition to electronic signatures represents a real opportunity for acceleration and streamlining. Explanation:
According to a survey on the evolution of electronic signature usage in France, conducted in January 2021 by YouGov, some companies had already adopted an electronic signature system as early as the initial outbreak of the COVID-19 pandemic.
Among those companies, 49% used it to initial sales-related documents and 41% for human resources-related documents.
What are the benefits of an electronic signature tool for legal departments?
The use of electronic signature within a legal department—whether in a company, a law firm, or other—has many advantages.
Electronic signatures have had the same legal validity as handwritten signatures in France and in Europe since March 13, 2000.
In September 2017, a decree came into force in French law clarifying that only the qualified electronic signature is equivalent to a handwritten signature.(Decree No. 2017-1416 of September 28, 2017) in the public order framework states that an advanced electronic signature meets these conditions.
Electronic signatures, which are becoming increasingly regulated and secure, are also legislated at the European level.
eIDAS, which stands for Electronic IDentification And Trust Services is a European regulation.
It establishes a legal framework and standardizes the use of electronic signatures by the legal departments of all entities that use them.
The eIDAS regulation breaks down electronic signatures into four security levels.
- Level 1 electronic signatures: this covers a category of legal documents where the signatories have no interest in denying their existence. This includes health or home insurance contracts, or even car insurance contracts. Security is ensured by two-step identity authentication (SMS with a code, etc.)
- Level 2 electronic signatures: These are for transactions involving a larger number of people, such as a broker commissioned by the client. More parties to the contract requires a higher level of verification. For example, for an insurance, pension, or savings contract, the signatory must authenticate their identity with a photocopy of an official ID document (passport, national identity card, etc.)
- Level 3 electronic signatures: here the same rules apply as for level 2 electronic signatures, the only difference being that in this case the customer signs an accredited certificate.
- Level 4 electronic signatures: this is the highest security level. The subscription to any contract is more tightly controlled since the data is more sensitive. There is a higher degree of verification of the identity of the parties involved. The level 4 electronic signature also involves the creation of a long-lasting signature certificate. It is ideal for regulated professions.
A clear European regulation on the subject is not the only advantage of the electronic signature for legal departments.
Indeed, it provides a way to prove the integrity of a document by virtue of the timestamp and the identification of the signatory.
In other words, it is impossible to falsify a document, to explain that it has been modified after signing and that the completed fields have been altered.
Lastly, the electronic signature has another important advantage for the legal department, i.e. that of saving time.
Rather than scheduling a meeting, sending documents and awaiting their return, etc., lawyers complete the process of gathering signatures much more quickly with an electronic signature system.
It reduces the time needed to gather signatures to a matter of minutes or hours, with complete traceability.
The electronic signature: what type(s) of legal document(s) can it be used for?
So, for which types of legal documents is the electronic signature suitable? Actually, just about all of them. This tool can be used on:
- Commercial contracts: whether it is a supplier contract, a sales contract, or a subcontract, the electronic signature is ideal for regulated professions to move business forward.
- Human resources: the HR or recruitment department can use the electronic signature tool to send documents back and forth with newcomers and have them sign letters of intention to hire or employment contracts. The electronic signature has real legal validity!
- Day-to-day life in companies: whether it is for meeting reports, general assembly minutes, or other documents impacting labor and civic affairs, municipal authorities, tax centers, and prefectures can all use electronic signatures.
- External growth operations: the legal department of a bank or an external party can use the electronic signature for share purchase agreements, for sale agreements relating to those same shares, making it easier to manage financial affairs and investments.
Today, electronic signatures can be used on all types of media, as long as the specific needs related to data security (customer, company, third party) are complied with.
How can you successfully set up an electronic signature process in your legal department?
Setting up an electronic signature process within the legal department of your company, especially when you work in a regulated profession, is quite straightforward.
The first step is to create a “contract library”. This is an easily accessible centralized location for all the types of digitized contracts your company deals with on a regular basis.
Such contractual documents, including quotes, sales contracts, invoices, etc. can then be sent to your customers and partners to be finalized with an electronic signature.
The contracts, signed and returned, must then be filed in your centralized database, so that your teams can keep track of their evolution.
When it comes to an e-invoice, the accounting departments will be able to know which invoices are paid, which are unpaid, which are outstanding with a reminder issued, or in the debt collection phase.
The objective is to make it easier to keep track of the evolution of the contract to ensure that all the necessary deadlines and objectives are met.