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svimp
Member

What are my chances of winning a third-party arbitration?

What are my chances of winning a third-party arbitration?

 

Here is the case. 

 

The client requested job "A" in various size formats. 

 

I provided him the first version of the job "A" in only one format for him to have a preview.  

 

After a couple of changes, he approved the job "A" saying that it looks perfect, and then asked me to do the other sizes based on the approved one. 

 

After providing him de the rest of the variations he told me that he is not satisfied with the overall work.

 

I asked him to give me more details of what does he want to change and I will be willing to do other changes if he needs to. 

 

He replied saying that he will feedback me later. 

 

I waited a couple of days, then he suddenly closed the contract without any notice. 

 

He paid only 15% of the amount in escrow. 

 

He can now basically use the work for only 15% of the cost. 

 

I opened a dispute and I am in the mediation phase. 

 

I asked for the full release of the funds since the work is 100% done based on his initial feedback.

 

The client instead is asking me if I am willing to work again on the same project with the idea of making better work.

 

The client proved to be unethical and I am not willing to risk working for him again.

 

I am willing to go further for the third-party arbitration. Either if I lose or win I will still lose money.

 

I just don't want to let these kinds of clients getting away so easily. This will become a habit if we let them messing around with our time. 

13 REPLIES 13
petra_r
Member


Ciprian M wrote:

 

I am willing to go further for the third-party arbitration. Either if I lose or win I will still lose money. 


That will likely mean the client will NOT go to arbitration, which would then mean that you get your arbitration fee back and the funds in Escrow.

 

Stand firm and simply insist that you want to move to arbitration. 

 

I'd almost bet the client will walk away.

So if I win the case the arbitration fee that I paid gets back to me? I was thinking that I will lose that fee anyway. 

 

 


Ciprian M wrote:

So if I win the case the arbitration fee that I paid gets back to me? I was thinking that I will lose that fee anyway. 


No. If arbitration goes ahead, you do NOT get the fee back. But that requires the client to also pay the arbitration fee.

 

You are offered to pay for arbitration first. If the client does NOT pay for arbitration (which is sounds like, if the client can't win any money either) then you get the escrow funds and your arbitration fee back.

 

It's a little bit of a bluff

Thanks, it's clear now. 

re: "I just don't want to let these kinds of clients getting away so easily. This will become a habit if we let them messing around with our time."

This is an important statement.

What you actually mean by this statement is important.

 

If taken very literally, then you are saying that your only priority is to not let these clients get away so easily. If that is the case, then absolutely you should push for arbitration every time. Because then the client WILL NOT get away "so easily." The only possible outcomes (if you absolutely hold fast and push for arbitration) will be one of these:
a) the client will back down, and you will get all of the escrow money
b) the client will agree to arbitration, and will incur a non-refundable $291 fee (and will probably lose the escrow money after arbitration renders a decision)

 

Even if the client wins all the escrow money in an arbitration decision (unlikely) the client will have still lost the $291 fee. So, by definition, you have prevented the client from getting away "so easily."

 

Having said all that, it is important to point out that "just making sure that a client doesn't get away so easily" is a DIFFERENT goal than "maximizing my profit" or "avoid wasting my time."

If a freelancer is not primarily interested in punishing a client, but is more interested in maximing profit, then a freelancer might make other decisions.

What if (for example) the total fixed-price escrow money in dispute is $50?
Does it make sense to pay $291 for the possibility of winning arbitration and getting that $50?

 

Maybe. Maybe not.


It still may make the most sense to push for arbitration, based on the calculation that the client will not want to pay $291 in order to get $50 back. If the client is acting in purely rationally and mathematically, then the client will back down. But if the client's primary goal is to "punish" the freelancer, regardless of cost, the client could agree to go forward with arbitration - even if the client knows he won't win and get $50 back.

 

In my opinion, it's all a bit messy and a waste of time, which is why I always advise avoiding getting entangled with the dispute and arbitration processes.

 

For freelancers I understand that there are times when the actions of an unethical, unprofessional client make using these mechanisms a viable option.

 

For clients - especially - all of this is a complete waste of time. Clients have total freedom to monitor the work that freelancers do and end contracts at any time. So for a client to get involved in a dispute or arbitration... To me that represents a real failure at understanding and using the powerful tools and freedoms that clients have.

For freelancers who want to avoid getting involved in disputes and arbitration, my recommendation is to use hourly contracts. But if a freelancer is going to use fixed-price contracts, she should start out with small contracts representing only an hour or two of work when she starts working with an unfamiliar client. If a client demonstrates that he can be trusted, then the freelancer can agree to increasingly larger fixed-price contracts. This way, if a client shows that he can NOT be trusted to pay a freelancer as expected using the fixed-price contract model, simply walking away from the contract without getting paid (while retaining ownership of the work) remains a viable and not so painful option for the freelancer.

What I wanted to say in my statement is that If we freelancers don't take action, this platform will become worthless and very trustless. Meaning that freelancer's work is at risk of not being paid. Or freelancers will work with the anxiety of their work may not be paid. 

 

So my main goal here is not to punish the client for being unprofessional. The main goal is to prevent these kinds of clients to take advantage of other freelancer's work in the long term.  

 

 

 

Ciprian:
I think you and I would both agree that the current Upwork system makes it possible for clients to abuse the system.

 

And some clients DO abuse the system and try to manipulate it in order to rip off freelancers.

 

This is very unfortunate. I wish that Upwork didn't make this so possible.

 

Personally I believe that the overwhelming majority of Upwork clients are honest, ethical, and professional. This fact is really what prevents there from being far more problems than there already are.

 

But I DO believe there are too many problems with the small minority of clients who abuse the fixed-price contract model. If it was up to me, I would definitely place greater restrictions on clients' ability to avoid paying freelancers using fixed-price contracts.

 

If it was up to me (which it isn't) I would also be fairly aggressive in changing the messaging that clients see. I would want them to use fixed-price contracts with the idea that once they fund an escrow payment, that money is supposed to go to the freelancer. And that money is supposed to be released when the freelancer finishes the task. I would prefer to see clients decide to fire freelancers who they feel don't measure up to their expectations. I would prefer that as the "default" behavior expected of clients, rather than having clients think they can either get money back or ask a freelancer to do endless revisions and new, out-of-scope work.

Go for it, Ciprian, as long as you are willing to pay your part of the required fee, if it comes to that. (Please come back and let us know if Upwork was also willing to pay that fee, if it comes to that.)

 

It's too bad Upwork doesn't make clients worry about their reputation as much as freelancers have to worry about their reputation (via the Job Success Score).

 

A certain kind of client might be alot less willing to ask for refunds, require mediation or threaten arbitration if any freelancer who considers working for them in the future will see that the client has had X number of refund requests and utilized X number of episodes of mediation and arbitration with previous freelancers. I don't think the current client rating system, such as it is, is all it could be.

 

Every client who uses Upwork should have to worry about what kind of reputation they build on Upwork over time. That isn't really happening in the current system.

wlyonsatl
Member

Ciprian, What is happening with your dispute - has it been resolved?

Hi Will, 

 

Sorry for not posting the outcome of my dispute here. 

 

The mediator insisted that a third-party arbitration is no need to go forward on my case because is time-consuming and costs money. 

 

The mediator convinced the client to pay me another 15% percent or so of the remaining escrow money and the rest of the amount remaining to be paid around 40%  percent was paid to me by Upwork. They call it a courtesy credit. 

 

So, in the end, the client got away with my work by paying only 30% of the agreed amount and I got paid about 70% of the agreed amount. 

 

I am not proud of myself for accepting this deal but I did not know my chances of winning the dispute and I was not ready to pay for the arbitration fees. 

 

Anyway, I still encourage other freelancers who deal with similar situations to open a dispute if they feel fooled. 

 

 

Thanks for the update, Ciprian.

 

I assume Upwork can't afford to spend $291 on arbitration to resolve disputes very often, so it's interesting they wouldn't allow it in your case. The 40% Upwork paid to you must have been less, and maybe much less, than $291?

 

All things considered, you probably did as well as you could expect.

 

We'll never know if the client learned his lesson, but only paying 30% of the agreed price for your work is a pretty good deal - for him. Upwork paid you more than he did for your work.

 

 

 

 

Exactly,

For you to make a better view of the case, the fixed price of the project was 175$.

The client payed me 50$
Upwork payed me 75$

The client initially payed me only 25$ stating that he also rated me 5 stars and I should be happy with that.

I don’t know if he learned his lesson but I know for sure that on the New Year’s Eve he was obligated to respond on messages on the dispute platform and he seemed pretty mad because of that. :).

Cheers!

His dishonesty interrupted his New Year's Eve celebration?

 

Sounds like karma to me.

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