Bankruptcy court judge rejects DocuSign signatures as authentic sources, sanctions attorney

By Michelle de Leon | Oct 21, 2016

SACRAMENTO -- A Sacramento lawyer has been sanctioned following his failure to use original signatures of his clients, but instead using electronic signatures for official documents in a bankruptcy case.

Paul Bains, a bankruptcy attorney, was ordered by Judge Robert Bardwil of the U.S. Bankruptcy Court for the Eastern District of California to review the electronic filing procedures, specifically the use of DocuSign on official papers. In his memorandum decision, the judge noted that the computer program could be considered as a replacement for the handwritten signature necessary in official documents. Bardwil further pointed out that the integrity of the filings is at stake – a concern that reinforces the need for original signatures.

In his decision, Bardwil acknowledged that DocuSign, as well as other software-generated signatures, are generally accepted in commercial dealings. However, the judge stressed that original signatures are still essential in certain cases. In relation to Bains, Bardwil explained that bankruptcy petitions are among the important matters that require original, handwritten signatures.

“Although DocuSign affixations and other software-generated electronic signatures may have a place in certain commercial and other transactions, they do not have a place as substitutes for wet signatures on a bankruptcy petition, schedules, statements and other documents filed with the court, and they do not comply with this court’s local rule,” wrote Bardwil in his memorandum.

The issue came to light when the United States trustee (UST) filed a motion against Bains due to the lawyer’s violation of the Local Bankruptcy Rule.

In handling the bankruptcy papers of his client, Bains used DocuSign to affix the required signatures for the filing of the petition, schedules and statement of financial affairs. He used the same software in affixing his client’s signatures for the statement of current monthly income, statement of intention, verification of master address list and statement of social security number.

In their motion, UST pointed out that Bains’ violated Rule 9004-1(c)(1)(C) and (D). The trustees stated that the Sacramento lawyer failed to accurately represent the existence of the originally signed copies for the documents since he  used DocuSign to affix the required signatures. Hence, no review was conducted to ensure the authenticity of the signatures, because none of the originally signed papers existed at the time of the filing. In his decision, Bardwil agreed with UST's concerns.

“Treating software-generated electronic signatures as original signatures would, as the [trustee] contends, ‘increase the possibility of confusion and mischief in the signature process (especially where less scrupulous e-filers are involved)’ whereas distinguishing them helps to protect the integrity of the bankruptcy system,” Bardwil stated in his memorandum. “The convenience of the debtor and the debtor's attorney pales when put up against the need to protect the integrity of the documents filed in bankruptcy cases.”

Bardwil said Bains could not assure the court completely of the authenticity of the signatures. For instance, the bankruptcy judge cited how the client could simply deny ever affixing his signature to the documents since no other person could testify otherwise. Bains had no means to prove the legitimacy of the signatures because he does not have the original ones in the first place.

The memorandum decision ordered Bains to complete the training course for online e-filing found on the court’s webpage. Then he is required to file documents stating his completion of the training.

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