Margo Tank

Margo Tank discusses e-signatures’ past and future

Margo Tank, a partner at Buckley Sandler, is one of the more influential individuals in the history of electronic signatures. She recently spent some time with ESRA looking back on the road to the current state of e-signatures in the United States and forecasting where the road will take us next.

“We’re in a good place,” she said. “Seventeen years ago, ESIGN was passed and signed into law. We thought 17 years ago that ESIGN would herald a tipping point, but what we’ve seen since then is a need for a lot of education and investment in change management and legacy systems. The law needed to develop from both judicial and regulatory standpoints, especially since the financial crisis and refinance boom took a lot of time and attention away from e-signatures.”

She added: “But we’re close. We see a lot of verticals in financial services, both consumer and commercial, doing pilots. There’s a lot of activity, a lot of acceptance. Enterprise policies are being developed and the questions are going from ‘Is it legal?’ to ‘How we do it and how do we do it faster?’”

However, there are still areas where the people in control don’t want to move too fast, she said. “The consent process for consumer transactions is still a little bit of a sticking point. E-notarization and e-recording in the mortgage space is still a sticking point. But those objections are quickly falling by the wayside as demand is bubbling up from consumers and other stakeholders in the commerce ecosystem, rather than just from vendors. A lot of companies are willing to share risk on more thorny issues.”

Tank noted that, unsurprisingly, a lot of the consumer demand is coming from a particular segment: “Companies are trying to make sure they serve all customer segments, including millennial customers, who don’t want to do things like walk into a bank branch. They’re a large segment.”

Tank’s role in e-signatures

With the current state of the business out of the way, Tank took a stroll down memory lane to discuss how she got involved in e-signatures. “It was way back in 1998,” she recalls. “The first wave of the Internet and the dot-com world. We were getting calls from a variety of large lenders and technology platforms. They were asking how to go consumer direct with portals. The Intuits and Microsofts of the world were needing to get licensed, because they had to take applications, present disclosures, and so forth.”

She continued: “Everyone had the same questions. ‘How do you meet the signing requirement in an electronic environment?’ There wasn’t much guidance out there from regulators. When there isn’t much guidance, companies get skittish and there isn’t much certainty.”

At the time, Tank was working in the House of Representatives, and a colleague of hers worked in the Senate. “We were both policy-minded,” she said. “I had identified a bill that involved e-signatures. We put together a coalition and got a group together to expand that very narrow e-signature bill into one that would also encompass e-records, so it could cover all transactions.

“We formed that group in 1998 or 1999 and spent the better part of a year working with trade associations to lobby for what’s now known as the ESIGN Act. You would think it would be a simple thing, but there was a lot of resistance. There was concern about the digital divide, such as whether wealthy people would have an advantage, and consumer groups were concerned about customers being duped.

“The Internet was relatively new. There were no iPhones, no iPads, for example. People were concerned about losing data and other things.

“We worked as a trade association with other trade associations to come up with a compromise piece, which is the Consumer Consent Provision, so consumers would have a choice and wouldn’t be forced into an electronic process and would understand the scope of it. After some wins and losses, we ultimately got the bill signed.”

Looking back on the past 17 years, Tank said that the approach to making the ESIGN Act happen was “a double-edged sword. The positive was that it was technology neutral, a procedural overlay where you weren’t going to go into every state law and change it. It was a fast efficient way to accomplish validity on a nationwide basis.

“The problem is that people are still struggling when they look at the law that applies to their transaction. The idea that it’s an overlay and you can replace what’s there with e-signatures makes people skeptical, which makes adoption difficult. Choice was necessary to get Congress to move forward. Back then, requiring people to do everything electronic wasn’t in the scheme of possibilities. So you had to have dual tracks. You needed upstream and downstream parties who have to agree.

“It was the price of going forward and we’re seeing some tripping over that. Hopefully we’ll get over that soon and opting in will be a no-brainer.”

Tank continued: “Another attribute of the simple approach is that there wasn’t a specific regulator to roll out ESIGN. That caused some confusion because companies weren’t sure what to do when their regulators weren’t doing anything. Part of it was ‘Let’s not over-regulate thus and let the market decide how to conduct business,’ but that was a bit of a problem too.

“Finally, the fact was there was low volume. There weren’t many problems and little court precedent. Today we now have excellent court precedent, so if a case has gone against e-signatures, it’s because there haven’t been good facts. Companies are implementing it. We’ve been saying for 20 years that it’s 3-5 years away from widespread adoption, but right now there’s meaningful volume.”

The landmark court cases

Asked about the cases that have helped bolster the cause of e-signatures over the past 17 years, Tank quickly listed several that were “seminal and interesting”:

  • Barwick v Geico: “That one functions as a good explanation of how ESIGN and UETA act as an overlay. (It was mostly about UETA). And how the interaction between underlying law and UETA play out. The curt got it right and said if you play by rules of UETA, you can replace it with an electronic record.”
  • Zulkiewski v General American Life: “A great case about attribution and security procedures that need to be in place and need to be reasonable to prove whether someone intended to sign.”
  • Berkson v Gogo: “Great case. Lengthy. Talks about presentation of information, labeling, and sophisticated Internet users.”
  • Lorraine v Markel: “A Lengthy opinion about entering electronically stored information.”
  • Adams v Quicksilver: “Talks about the benefits of an audit trail and how to use it to help prove up a case.”
  • Rivera v Wells Fargo and NY Community Bank v McClendon: “Both are foreclosure actions that support the electronic equivalent of a promissory note and how a system can reliably establish ownership of a note and where it is to meet rigorous ESIGN and UETA requirements. Helps prove if you have a transferable record.”

The next 10 years

Asked to close out the discussion with a forecast of the next decade, Tank replied: “I think the signature won’t matter. It’s more about the bookends of the process, authentication and record integrity. If we can figure out an interoperable authentication method that everyone is comfortable with, it can double as a signature too and help ensure record integrity.

She concluded: “We’ll probably use biometrics and smart contracts. ESIGN and UETA allow automated transactions today. We’ll also talk about code as law and blockchain, and how to transfer an asset value digitally with electronic signatures.”