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Time to Take a Look at Digital Signatures?

Legal since 2000, electronic signatures are only now coming into widespread use -- and they can make a big difference to your bottom line.
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Aurora Lifetools helps disabled people win Social Security claims. The firm typically works with clients whose claims have been turned down as too small by law firms that traditionally handle such matters, although Aurora is not a law firm, and its professionals who represent claimants are not attorneys. Since the sums involved aren’t huge, Aurora’s success depends on its ability to represent large numbers of claimants. Electronic signatures are a huge help to that effort, according to Drew Hyde, senior partner.

“About 12,000 people apply for Social Security Disability every day -- that tells you how big the market is,” he says. The company’s staff of nine, using electronic signatures combined with customer relationship management and database technology can enroll about 200 cases a day in Aurora’s system, he adds. “Without electronic signatures, those same nine people could pull in about 35 cases a day -- maybe.”

And, even if the company had a staff of thousands, some clients would be impossible to help without digital signatures, he says. “In the old days, we couldn’t take on anyone with less than a week to go before a filing deadline,” he says. It would simply take too long to get the papers certifying Aurora as the client’s representative signed and in place in time to submit a claim or appeal. Today, Aurora can complete the process of interviewing and signing up a new client by phone and Internet in about 12 minutes, Hyde says. “Now, someone can call us at 3 p.m., and we can submit the claim at 3:45 and protect that client’s rights.”

The time is right to move to digital signatures

In 2000, the Electronic Signatures in Global and National Commerce (ESIGN) Act decreed that a properly obtained electronic signature has the same legal standing as a handwritten one. Since then, adoption of electronic signatures has been slow, except in certain industries, such as financial services. But acceptance of digital signatures has been building to a critical mass in the last year or two, perhaps in part because the general public has grown comfortable with the basic concept of a legally binding Internet transaction, such as filing an online tax return or clicking “Buy It Now” on eBay.

At the same time, evolving technology has made digitally signing easier, according to Jason Lemkin, CEO and co-founder of EchoSign, an electronic signature service. “It wouldn’t have been practical in 2000, because you needed today’s browsers and Ajax [asynchronous Java Script and XML] to make the experience as easy and elegant as it is today,” he says. At the same time, as business in general becomes more Web-oriented, using paper contracts seems less and less logical. “When everyone’s using Salesforce.com and LinkedIn, it doesn’t make sense to have to use FedEx or a fax machine in order to close a deal,” he says.

Avoiding revenue loss

But there’s another reason to consider electronic signatures today -- one Lemkin says has created an upsurge in EchoSign’s business in the past few months. “The most important thing in today’s economy is revenue assurance,” he says. Electronic signatures help by allowing companies to close a legally binding deal in minutes, while a customer is still on the phone. “When you have customers who want to buy, you don’t want to make them dig up a fax machine or go out to the mailbox -- because they might not do it,” he says.

Revenue assurance is the biggest benefit of using digital signatures for Hcareers, a job board for the hospitality industry. “With many of our one-time transactions, we would simply work by e-mail confirmation,” notes Jim Finn, vice president of sales. That made life easy from a logistical point of view, but customers occasionally reneged on their deals. “We had a certain percentage of write-offs,” Finn says. “It wasn’t a large percentage, but we weren’t really happy with any.”

Today, Hcareers customers must digitally sign using Agreement Express, showing their consent to the site's terms and conditions, which include a commitment to pay for services used. The result: “We’ve had 80 percent fewer clients being sent to collections in the six months after implementing digital signatures,” Finn says.

Working with digital signatures comes with other advantages as well, he says. “It’s far more efficient than a fax machine, and better for the environment. My contracts are all in cyberspace, so I can print them if I need to -- and I don’t have two file cabinets standing outside my office.” In fact, he says, “From an efficiency standpoint, electronic signatures are the only way to go about securing contracts.”

Last updated: Jan 1, 2009

MINDA ZETLIN | Columnist | Co-author, 'The Geek Gap'

Minda Zetlin is a business technology writer and speaker, co-author of The Geek Gap, and former president of the American Society of Journalists and Authors. Like this post? Sign up here for a once-a-week email and you'll never miss her columns.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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