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Tech Bankruptcy
January 14, 2014
  Backing Away From Those Messy Electronic Signatures
Back in August, the Judicial Conference for the United States Courts released for comments proposed amendments to the Federal Rules of Bankruptcy Procedure, including revisions to FRBP 5005 that will effectively limit the types of electronic signatures usable on court pleadings.

Currently, the relevant part of FRBP 5005 reads:

Filing by Electronic Means. A court may by local rule permit documents to be filed, signed, or verified by electronic means that are consistent with technical standards, if any, that the Judicial Conference of the U.S. establishes. A document filed by electronic means in compliance with a local rule constitutes a written paper for the purpose of applying these rules, the Federal Rules of Civil Procedure made applicable by these rules, and § 107 of the Code.

Added in 1996, this provision allowed parties to file documents with electronic signatures, so long as the signatures conformed with the particular court's local rules. Different courts employed different requirements, some requiring that an original signature be scanned, with the attorney retaining the original signature. Others, such as my home court in Massachusetts, allowed use of a printed name, preceded by a /s/, to serve as a party's "signature" so long as the filing attorney maintained an original copy of the document with an original wet signature. Model Rules for Electronic Case Filing, approved in 2001, allowed use of an electronic signature in the "s/Name Here" format, but also required the filing attorney to maintain the paper document with the original wet signature. Wet signatures were still required for evidentiary purposes (particularly in the rare case involving subsequent criminal prosecutions) and, as a practical matter, requiring a wet signature made sure that the third parties, usually the bankruptcy debtors, were actually reading and signing the documents before their attorney filed them with the "s/Name Here" electronic signature. (Some of you commercial bankruptcy law types might look aghast at the possibility, but take it from a Chapter 7 trustee - that kind of thing happens all the time.)

The proposed revision is more specific, although it provides three alternatives:

(3) Signatures on Documents Filed by Electronic Means. 
     ....
      (B) Signature of Other Individuals. When an individual other than a registered user of the court’s electronic filing system is required to sign a document that is filed electronically, the registered user shall include in a single filing with the document a scanned or otherwise electronically replicated copy of the document’s signature page bearing the individual’s original signature.
[Alt. 1: By filing the document and signature page, the registered user certifies that the scanned signature was part of the original document.]
[Alt. 2: The document and signature page shall be accompanied by the acknowledgment of a notary public that the scanned signature was part of the original document.] 
Once a document has been properly filed under this rule, the original document bearing the individual’s original signature need not be retained. The electronic signature may then be used with the same force and effect as a written signature under these rules and for any other purpose for which a signature is required in proceedings before the court.

In short, no more electronic signatures. The wet signature is scanned, filed electronically with the court, and then thrown away. Warm up those scanners people and hire some support staff to attach those scanned signature pages to your single filings. It strikes me as a lot of extra work. Option two allows the filing attorney to certify that the electronic signature is really the debtor's, which strikes me as problematic for the filing attorney if the debtor disclaims his or her signature later on. Perhaps an attorney desiring to save scanning costs might like this option if he is willing to keep those original wet signatures anyway. The third option has the same issue - plus it leaves open the question of how you file the notarization. E-notarizations are not exactly commonplace. Perhaps the rule should give filing attorneys a choice - scan and toss, or use the /s/ and retain the original.

More amazing is the complete lack of an approach allowing the use of true electronic signatures - electronic documents signed using a click-through process or using a Signature Capture Pad. The technology is available to create and maintain truly enforceable electronic signatures. Perhaps bankruptcy attorneys still aren't using that technology, and perhaps the vendors that serve bankruptcy attorneys haven't yet incorporated the available technology into their products, but they will if the rules accommodate it. These rules won't.

Those are my comments.

What do you think? Written comments are due to the Judicial Conference by February 15, 2014.
 
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Warren E. Agin is a partner in Swiggart & Agin, LLC, a boutique law firm in Boston, Massachusetts focusing on the needs of technology companies. Mr. Agin heads its bankruptcy department. The author of the book Bankruptcy and Secured Lending in Cyberspace (3rd Ed. West 2005), Mr. Agin also chaired the ABA's E-commerce and Insolvency Subcommittee from 1999 to 2005, co-chaired the Boston Bar Association's Internet and Computer Law Committee (2003-2005), and served on the American Bar Association's Standing Committee on Technology and Information Services (2008-2011). Mr. Agin currently co-chairs the Editorial Board of Business Law Today. A contributing editor to Norton Bankruptcy Law and Practice, 3d, and co-author of its chapter on intellectual property for the past fifteen years, he is author of numerous legal articles and addresses on topics of technology, internet and bankruptcy law.

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