Law firms slow to adopt digital signatures

Info-Tech Research Group has published a report on digital signatures in the law field that claims that businesses are “signing on the virtual line for cost savings.” But an analyst and a lawyer said that digital signatures’ progress in the legal field may be steady, but it’s slow, too.

According to the report, “the legal industry has been lagging behind in adoption, despite the fact that other sectors have been using digital signatures for years.”

Digital signatures should not be confused with digitized image of signatures. True digital signatures, said the report, “use a public key infrastructure (PKI). Under this model, signers have their own paired public and private keys (electronic codes), where the private key is used for creating signatures and the public key is for verifying authenticity.”

Digital signatures must have signer authentication, document authentication, and an act of affirmation (which means that they “establish a sense of having completed a legally binding transaction,” said the report).

Ottawa-based lawyer Kris Klein said, “My belief is that it isn’t really catching on because of the confusion surrounding how the technology works. Terms like PKI and public and private keys are still too amorphous for many people to understand.”

They’ve been around since the turn of the decade, when digital signatures were touted as the next big thing, said Forrester Research analyst Bill Nagel. “But then there was the technological immaturity, companies not adopting it fast enough, and the fact that the application tended to slow down the network considerably,” he said. “It was expensive and difficult to implement, as those in-house wouldn’t have had the expertise.”

He said that PKIs are picking up now that the technology has gotten better and computers are faster, with the financial, insurance, and auto refinancing industries taking the lead. The majority of use-cases where digital signatures are being used in the law field are firms that have to manage a large volume of legally binding paperwork requiring signing. (Examples include firms that have to deal with a lot of contracts, such as those in patent law or food and drug law.)

Firms can reap benefits like a more paper-free work environment, and all the productivity cost savings to be reaped from that.

Info-Tech Research recommends that users employ digital certificates, which are given by third-party certification authorities to make sure that the key pairs in question correspond to the right parties. Opting for a data recovery plan is also the better alternative to key recovery, as it “compromises non-repudiation because it involves creating copies of private keys.”

Many firms still have a lot of concerns, though, said Nagel. “The software is still complex to implement and will most likely require an outside party, and then you have to trust that vendor follows the same security practices because of the regulatory burdens,” he said. At the heart of it is a big culture shift, which can be hard to make, as a lot of people in the law field are set in their ways that mailing contracts is more secure than doing it digitally.

Klein has experienced this first-hand. “My law firm has attempted to go as paperless as possible. It is difficult, however, when opposing counsel demand that they receive paper versions of everything. It is not clear to me why they insist on receiving paper versions, though one reason may have to do with the lack of trust in computerized systems to retain evidence. Far too often, we still experience “crashes,” and, despite large technology budgets, the fear is that information will be lost if it isn’t also contained on a piece of paper in a filing cabinet somewhere,” he said. “The other reason is that the Law Society in Ontario has not showed any leadership in this area. It requires that most accounting records contain paper copies somewhere, and even correspondence with the Law Society often has to be done via paper, as opposed to electronically.”

Said Nagel: “It’s completely ridiculous, but people are completely set that physical signatures are the most binding.”