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Why is Upwork arbitration process so costly? I mean we are already giving away 20% to upwork for man

sarvajain
Active Member
Sarvagya J Member Since: Jul 17, 2019
1 of 9

Why is Upwork arbitration process so costly? I mean we are already giving away 20% to upwork for managing the paltform?

robin_hyman
Community Guru
Robin H Member Since: May 28, 2019
2 of 9

To hinder people from using it.  If it's for a small project, no need for arbitration.  

sarvajain
Active Member
Sarvagya J Member Since: Jul 17, 2019
3 of 9

So does upwork mediation really solves the issue?

lysis10
Community Guru
Jennifer M Member Since: May 17, 2015
4 of 9

Sarvagya J wrote:

So does upwork mediation really solves the issue?


Usually, yes, because nobody really wants to do arbitration and many times you can get a good portion of your money out of the client.

prestonhunter
Community Guru
Preston H Member Since: Nov 24, 2014
5 of 9

It is not Upwork's intention that you use arbitration. It is NOT part of the standard way that freelancers work on Upwork. It is NOT part of how Upwork earns money.

 

Arbitration is sort of a "safety valve" for when things go wrong... In order to have a true escrow system, Upwork needs to provide arbitration as a final step if the client and freelancer can not agree about disbursement of escrowed funds.

 

Arbitration is a costly process it involves Upwork hiring an outside, independent arbitrator and paying the fees to do so. Upwork is almost certainly losing money if this happens.

 

Both freelancers and clients should manage their projects proactively and responsibly, in such a way that they never need to get into a dispute or go to arbitration.

prestonhunter
Community Guru
Preston H Member Since: Nov 24, 2014
6 of 9

re: "So does upwork mediation really solves the issue?"

 

Going to a dispute ("mediation") does NOT cost you anything.

 

You should avoid going to a dispute. But if necessary, a dispute (mediation) usually ends up in the issue being resolved.

lysis10
Community Guru
Jennifer M Member Since: May 17, 2015
7 of 9

Sarvagya J wrote:

Why is Upwork arbitration process so costly? I mean we are already giving away 20% to upwork for managing the paltform?


You realize it isn't Upwork who does arbitration, right? It's an outside service and the cost is about $1000 so everyone pays a portion. It's AAA (I think it's three As and not 4 lol). Google them to see the fees.

tlsanders
Community Guru
Tiffany S Member Since: Jan 15, 2016
8 of 9

Sarvagya J wrote:

Why is Upwork arbitration process so costly? I mean we are already giving away 20% to upwork for managing the paltform?


You're actually getting a discount because Upwork hires a lot of arbitrators and presumably has an agreement with the organization. Most arbitrators I have worked with charge a minimum of $1,500.

prestonhunter
Community Guru
Preston H Member Since: Nov 24, 2014
9 of 9

Most arbitration (and disputes/mediation) can be avoided by doing this:

 

If you are working on a fixed-price contract with a client who is new to you, then start with something small. Not the whole project. One small task, the first task. Something that will take only an hour or two. If you do the work and the client pays you as expected, then you can continue to work with the client on increasingly large fixed-price milestones or contracts. If the client plays games, then you have not invested so much time into the work, and you can walk away if necessary. (Remembe that you retain ownership of any work you do that the client doesn't pay for.)

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