In this issue

Note: I have a more recent newsletter on e-conveyancing.

A business proposition came up recently which introduced a new term to me: e-conveyancing or paperless house purchase.  The Land Registry has published a report and the results of its consultation - about 300 pages in total and already who knows how many £millions, plus of course a web site http://www.e-conveyancing.gov.uk. 

People who should know tell me 'its definitely going to happen'.

I read this documentation and my reaction was twofold.

1. It will not fly
2. I have been here before

Before I launch into my rant, I should point out that I am not a conveyancing expert, and the following is just my personal view.  The author cannot be responsible for ... [you can add your own legal gobbledegook].  

Signing documents on a computer

E-conveyancing is taken to mean a wide variety of things, and obviously automating the administration of house purchase is a Good Thing.  The part that I query in the new e-conveyancing world is that all legal documents will be held electronically in a central database, with documents being 'digitally signed' instead of our normal handwritten signatures.  

If properly used a digital signature is much safer and fraud-proof than a regular signature.  However it is a pretty complicated subject, so rather than break the flow with a long-winded explanation I have tried to explain how it works with a little fable at the end of this newsletter.  However there are two things you need to understand.

1. A digital signature is a computer file that accompanies the electronic document.  It verifies that the document was signed by a particular person, and the content of the document hasn't been changed in any way, not even a single character, since it was signed.  
2. In order to make this work, the signatory of a document needs to obtain and install a special computer file called a certificate.  The certificate is issued by some trusted central authority.

Back to e-conveyancing

I just purchased a flat, and it involved me occasionally getting some documents in the mail, signing them and putting them back in the post.  In the new super-efficient digital paperless world, I will need to add a digital signature to the various documents that I need to sign. 

Here is what the consultation document says on the subject:

"6.2.7 Signing the contract
Signing an electronic contract clearly will differ from signing a paper document. The difficulty at present is that very few individuals have electronic signatures [sic] and people generally are not very familiar with the concept. We do not propose to discuss the theories and possibilities of electronic signatures here,...."

OK, then I will discuss it.  

If the house purchaser and seller is supposed to be doing this at home, they will need to: 

• Install some MI6-grade software on their computer, 
• Obtain a certificate 
• Install the certificate,
• Run the software to sign the document 
• Get the document plus signature to the solicitor for processing. 

Someone somewhere might come up with some fancy way of packaging this up for the average punter who can't work their video recorder.  But I remain unconvinced.

There are in practice two alternatives:

1. The purchase and seller have to go to the solicitors office to sign everything
2. The solicitors sign on their behalf.

The first option has pretty much been rejected, and the second (signing by the solicitor) is the preferred choice.  

It doesn't take much imagination to see what could go wrong. 

• It changes the status of the solicitor from an administrator to the participant in transactions involving huge sums of money.  Expect conveyancing costs to skyrocket. 
• The homeowner has to sign a piece of paper authorising the solicitor to sign on their behalf. So the paper hasn't gone away, it is just deposited in some solicitors office.   
• Will the average housebuyer understand this and accept it?  I would have my doubts.

The system will fall like a house of cards the first time a large transaction goes pear-shaped and gets reported on the nine oclock news or the Daily Mail.

This is clearly a major difficulty.  However in the 300 odd pages of the Land Registry report and consultation document the topic of digital signatures is covered in a few paragraphs including the classic 6.2.7 above. 

Now where have I seen this before?

As soon as I read the Land registry reports it was deja vu all over again.

About five years ago the banks looked at the new world of e-commerce and were horrified at the possibilities for fraud.  Visa and MasterCard came up with SET (Secure Electronic Transactions).  The idea was that our banks would all issue us with certificates and we would digitally sign every credit card transaction that we made on-line.  Huge amounts of money were poured into this and a whole industry created. 

• Certificates were going to be put on the chip on our bank card.   
• All computers would be made with built-in smart card readers.  
• In the meantime there were smart-card readers that could be put in the floppy drive of older computers which would be so cheap that the banks would give them away.   
• All the e-commerce software was going to be enhanced to support SET. 
• Venture capitalists funded software companies by the dozen.  
• A web site was set up (it is still there http://www.setco.org)
• Bankers would tell me that it was 'definitely going to happen'.  

All completely impractical of course.  I said so at the time. 

It will not fly

What this proves to me is that human beings have an in-build capacity for self-deception.  Often, the more senior people behind this type of project have a fairly shaky understanding of the technology, and the more technical staff see it as a CV-enhancing opportunity. Once this sort of thing gets beyond a certain point it acquires a momentum of its own, and a kind of 'group-think' sets in where to question the underlying concept is unthinkable. 

But it will not fly.  Mark my words.

Now for the promised explanation of digital signatures

This is complicated stuff, but I will try to explain this with a little story that hopefully will help explain the basic concepts.  You can skip this section and the next if you are not very interested in how digital signatures work (or you already know).

Once upon a time...

There was a Chinese emperor who wanted to send valuable presents to his cousins who lived in far-off lands.  However, he was worried that the merchants would substitute cheap copies en-route. He had his chief locksmith create a set of small boxes which had a very special type of lock.  The lock needed two keys, one to lock it and a different key to unlock it (this may seem a bit strange but you have to admit the possibility). 

The emperor had only one 'lock key', but had many copies of the 'unlock key' made and sent them to all his cousins. Now if he wanted to send a present - for example a vase, he had his artists make drawings of the vase and put them in the little box.  Then he locked the box and sent it with the vase to his cousin.

When his cousin got the present, he unlocked the box and checked the vase against the drawing.  Provided everything matched, he knew it hadn't been tampered with.  The emperor must have sent it because only he could have locked the box in the first place.  He knew the vase hadn't been replaced because he had checked the very detailed information in the box.

But ...

But how did the cousin know that the unlock key he received in the first place was really from the emperor. 

The answer is simple.  The emperor used the same system to send out the unlock keys.  However, this time the little box with the picture of the key in it came from the chief locksmith.  The chief locksmith's unlock keys were widely distributed and everyone had a copy somewhere in their house, so nobody could substitute a fake.  

When the cousin received the key from the emperor he unlocked the little box using the chief's unlock key, checked the picture and put the emperors key on his keyring safe in the knowledge that it was genuine.

What have Chinese emperors got to do computers 

As implemented in the computer world this gets mind-bendingly complex.  The equivalent of the picture and the box is a computer file called a digital signature. The equivalent of the chief locksmiths box and picture is called a certificate. The equivalent of the chief locksmith is a central certification authority such as Verisign, Inc. 

However they can delegate to other authorities so you potentially get a chain of certificates - called a certification path.    I didn't cover that in the story but you probably get the drift by now.