Guru - Dispute Resolution and Arbitration
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Guru’s first dispute resolution step is a mediation process. Either the client or contractor can initiate the mediation process if there are funds in a SafePay Escrow account that are in dispute. A mediator from Guru is assigned to the case and both parties are required to (digitally) sign a “Consent to Mediate” form. If either party does not return the form within five business days, the mediator can forward the case immediately to the arbitration phase, where the arbitrator may summarily rule against the party who did not grant consent.
The job of the mediator is to help the client and contractor come up with a mutually agreeable solution to their conflict without the need for arbitration. He or she focuses mainly on communication, and ensuring that both sides are clear about any points of contention that are holding up the project. The mediator does not take sides, evaluate work product quality, or give opinions on whom he or she thinks is in the right.
Based on Guru’s figures, their mediators are pretty good at what they do; as mentioned earlier, the company claims 3% of projects using SafePay Escrow go into mediation, but only 0.5% go to arbitration. That’s a success rate of over 80%, which isn’t bad at all. My guess is that a big chunk of these are one-sided cases where the process of mediation is able to convince the at-fault party to give up rather than wasting time on arbitration.
Assuming that mediation leads to an amicable settlement, the dispute resolution process ends with whatever arrangement the parties agreed to: refund of the escrow to the client, disbursement to the contractor, or perhaps a split of the funds. If no deal can be reached after 20 days, the mediator will advance the case to Guru’s arbitration team. This can also happen sooner if either side refuses to continue with mediation, or if the mediator feels that further discussion is unlikely to be fruitful.
Arbitration is essentially a form of “small claims court” with a Guru employee acting as the judge. Both sides present their cases, including supporting documentation, to convince the arbitrator to rule in their favor. Guru arbitrators are charged with assessing four main issues: whether work was done; whether it was done on time; whether the scope of work met the requirements of the project; and whether the quality was up to the standard required by the client.
The arbitrator is able to ask questions of either party, with responses required within two business days. Guru promises that arbitrators will rule on cases within five business days following the unsuccessful end of mediation. The arbitrator’s decision is considered final and there is no appeal process.
Guru has a few noteworthy policies that govern how its arbitration works. The company is to be commended for spelling out these policies clearly in its help files, where some sites implement their arbitration procedures as “black boxes”.
First, the burden of proof in the arbitration is placed clearly on the freelancer. That is to say: the freelancer is required to show why the funds in escrow should be released, as opposed to the client being required to show why they should not. The contractor must demonstrate that the work was completed and delivered in a manner consistent with the schedule and quality requirements of the project agreement.
Second, Guru arbitrators will look at both on-site and off-site communications. This surprises me, because it is extremely easy to forge almost any digital communications or documentation. I assume that Guru knows this and takes it into account when assessing such evidence as forwarded emails or off-Guru instant message logs. I also have noticed that while this concern is not specifically addressed in the Guru help files, the company’s Terms of Service implies that parties do have the ability to dispute the validity of off-site communications.
If the whole process sounds to you like it favors clients over contractors, well, it sounds like that to me as well. Freelancers should especially note that if there is no project agreement, Guru states clearly that the arbitrator defers to the timeline and quality demands stated by the client. This is one place where the common practice of not having a project agreement can really come back to bite a freelancer in the butt. One would presume that even without a formal agreement, some sort of informal arrangement was made about what work was expected and when it was due. Presumably these communications could be used as evidence to contradict an unreasonable demand by an employer, but absent such evidence, the freelancer is out of luck. This is one reason I strongly advise using on-site communication for all negotiations with clients.
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Last Site Update: October 21, 2011
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