Your money in escrow and disputes

sourceprouk · ‎03-28-2019

For the benefit of other Freelancers who may encounter this problem

(note, I am not asking for advice, the matter is over; but comments are welcome)

After working in Elance/Upwork for several years I had a dispute with a client, recently, for the first time. I realised that having money deposited in Escrow, on fixed price contracts does not necessarily protect you from unscrupulous clients.

To cut a long story short, I started working on a $1700.00 contract with a client. He deposited $300 in Escrow for the first milestone. At the end of it he started doing what many do and set about asking for more work done within the milestone. I told him to proceed to the next milestone. He said no - I knew he was only trying to get as much free work as possible and that he would then cancel the job. He released $25 from Escrow and asked for $275.00 back.

The matter went to a dispute, then I realised the problems. It cost me quite a lot of time gathering the information for the Upwork mediator who made no decisions in the end. She was also trying to convince me to accept a low payment on the basis of the cost to go to arbitration. It costs $873.00, equally divided among the client, freelancer and Upwork at $291 each, to pay the arbitration body.

That is when an unscrupulous client can exploit the situation, it could have cost me an extra $291, on top of the $275 he still owed me, if the arbitration went against me. He tried to take advantage of this. On any jobs worth less than $300 the freelancer will always have this dilemma, let alone on jobs worth $50 where I think most freelancers would take $10 rather than risk losing the money and time on arbitration.

So I decided to call his bluff, I paid the $291 fee and asked the mediator to take it to arbitration. The client did not bother to pay his share. I got the Escrow money and my arbitration fee returned. I am now disputing the bad feed-back he left me in retaliation.

If I had caught an arbitrator in a bad mood, I would have lost $566.00

This Escrow system needs improving.

lysis10 · ‎03-28-2019

Federico D wrote:
For the benefit of other Freelancers who may encounter this problem
(note, I am not asking for advice, the matter is over; but comments are welcome)

After working in Elance/Upwork for several years I had a dispute with a client, recently, for the first time. I realised that having money deposited in Escrow, on fixed price contracts does not necessarily protect you from unscrupulous clients.

Yep, some people have been saying that for a while, but that doesn't mean the dummies that want to argue about it won't stop flappin their pie holes.

To cut a long story short, I started working on a $1700.00 contract with a client. He deposited $300 in Escrow for the first milestone. At the end of it he started doing what many do and set about asking for more work done within the milestone. I told him to proceed to the next milestone. He said no - I knew he was only trying to get as much free work as possible and that he would then cancel the job. He released $25 from Escrow and asked for $275.00 back.

The matter went to a dispute, then I realised the problems. It cost me quite a lot of time gathering the information for the Upwork mediator who made no decisions in the end. She was also trying to convince me to accept a low payment on the basis of the cost to go to arbitration. It costs $873.00, equally divided among the client, freelancer and Upwork at $291 each, to pay the arbitration body.

That is when an unscrupulous client can exploit the situation, it could have cost me an extra $291, on top of the $275 he still owed me, if the arbitration went against me. He tried to take advantage of this. On any jobs worth less than $300 the freelancer will always have this dilemma, let alone on jobs worth $50 where I think most freelancers would take $10 rather than risk losing the money and time on arbitration.

So I decided to call his bluff, I paid the $291 fee and asked the mediator to take it to arbitration. The client did not bother to pay his share. I got the Escrow money and my arbitration fee returned. I am now disputing the bad feed-back he left me in retaliation.

If I had caught an arbitrator in a bad mood, I would have lost $566.00

This Escrow system needs improving.

You played it right actually except for taking the time to gather info to show the mediator. Don't even bother because they can't make a decision. Just upload whatever you have and tell the mediator you want $x or arbitration. Let the mediator do their thing. They will come back and suggest revisions or a settlement, but you just say "$x or arbitration."

Anything below $300 is a cake walk, because chances are the client won't pay $300 for arbitration.

petra_r · ‎03-28-2019

Federico D wrote:

So I decided to call his bluff, I paid the $291 fee and asked the mediator to take it to arbitration. The client did not bother to pay his share. I got the Escrow money and my arbitration fee returned.

Well done! As the mediator can not make a binding decision, arbitration is the only way to get a dispute decided in a binding manner. You played it just right, because you were able (could afford) to call the client's bluff.

The client would have had to be insane to go to arbitration, and frankly every arbitration I have witnessed with friends or through the forum, went in favour of the freelancer. (Maybe because most freelancers won't take something to arbitration unless they KNOW they are in the right.)

Federico D wrote:
I am now disputing the bad feed-back he left me in retaliation.

I would not hold my breath on that front, there is no basis (under the terms of service) to dispute it. The feedback was already left before the dispute, so it wasn't in retaliation for the dispute outcome.

wlyonsatl · ‎03-28-2019

Good for you. This kind of client needs to be set straight, but too many freelancers don't have enough money on the line or cannot otherwise afford to put out $291, even for an almost-sure thing win at arbitration.

I expect this kind of client will try to keep all his milestones well below $291 in the future, so only well-heeled freelancers will be able to win against him at arbitration.

I do wish Upwork would put into every client's (and freelancer's) profile information about how many contracts they've canceled, how many of their projects have gone to mediation and arbitration and other information that would let the rest of us separate the wheat from the chaff before agreeing to contracts.