Debtor E-Signatures No Good, says Bankruptcy Court

Technology is making communicating with each other so much easier.  We can call almost anywhere, text, stream live video.  In the world of court papers and documents, many courts have even adopted e-filing systems.  As technologies move more in the direction of convenience and efficiency, how does the role of ‘wet ink’ signatures change?  At least for a bankruptcy court in California, wet ink signatures of bankruptcy debtors are irreplaceable.

This case comes out of the Bankruptcy Court for the Eastern District of California.  Apparently, the debtor’s bankruptcy attorney uses a service called DocuSign to have the debtors e-sign their bankruptcy papers.  That is, through the DocuSign service, the debtor could review and sign the papers right from their home or anywhere that they have access to the internet.  To sign a document, the debtor would have to click on a button to confirm their acceptance.  At no point, however, did this attorney ever have the debtors actually physically sign these papers.

The US Trustee’s office found out about the practice and brought a motion for sanctions against the attorney.  The Trustee’s office argued that the DocuSign electronic signature is not a software-generated electronic signature that satisfies a local rule (which required wet signatures even for documents that may be e-signed).  The attorney argued that the e-signature created by using the DocuSign service is sufficient because (1) the debtor has to manually click a button for each signature imprint, and (2) the debtor signed a declaration (after the fact) stating under penalties of perjury that he intended the e-signatures to be his signature for all purposes.

The court took  issue with this practice because it feared that there is no security measure in place to confirm the identity of the person using the program on the debtor’s end.  That is, by using DocuSign, how does anyone know if it’s the debtor, or maybe the debtor’s children, or maybe someone falsely purporting to be the debtor.  To avoid any and all questions, the court requires wet ink signatures to be maintained.  In re Mayfield, 16-22134-RSB (Bankr. E. D. Ca., July 2016).

This case is interesting as it highlights a crossroad in the legal practice.  Today, we can use the internet to access medical records.  We use the internet to get replacement social security cards and handle DMV transactions.  We use the internet to obtain credit reports, or to apply for credit cards.  E-signatures are becoming prominent in commercial transactions, as well as in real estate transactions.  Courts have to become aware of technologies that exist, and allow for the integration of those technologies into the legal practice.  People want convenience, and if a law office can offer the convenience of having documents e-signed at your house, there shouldn’t be a problem with that.  Although this wouldn’t have been a problem for the attorney had he just had the debtor sign a copy of the papers (which is required by the local rule), it reveals how slow the legal profession is in embracing tech.  Everything we do now is username and password based, so why not signing court documents?

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