Using Mediation to Get the Money You’re Owed

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Credit: Andresrphotos on Photodune

It's not unusual for a client to put a clause in your contract that, if there's an issue, they want to go to mediation, rather than court. Whether or not mediation is a good thing for you, as a freelancer, isn't a simple yes or no question.

Why Mediation is On the Table

Especially if you're dealing with a larger company as a client, mediation is popular because it's theoretically faster and cheaper than going to court. If you're based in one state, and your client is somewhere else, just figuring out which jurisdiction to file in can be incredibly complicated. Mediation can take place wherever the parties involved agree on, and there's a little more flexibility about being in the actual room where the mediator is sitting.

It's worth noting that mediation and arbitration are two different situations. In both cases, there's a third party involved, but the exact function of that person is very different. A mediator works to help the two parties involved in the dispute come to an agreement, but that agreement is not binding. In contrast, an arbiter hears both sides of the situation and makes a decision, like a judge might. That decision is usually binding.

Because mediation isn't binding, you may find that it is not always possible to get an equitable agreement out of mediation, especially if you and your client have very different understandings of the situation. Mediation does not rule out a law suit and can simply lead up to one.

Why Freelancers Should Keep Mediation in Mind

Despite the drawbacks of mediation, it's still a useful option for freelancers. It can be significantly less expensive to use mediation than to try to take a client to court. While you will likely need some legal advice in order to pursue mediation, you're looking at hundreds of dollars, rather than the thousands of dollars that it often takes to sue someone — which, in turn, puts litigation out of reach of many freelancers trying to collect unpaid invoices.

Mediation is less costly in terms of time, as well as money. If you're looking at a big case, you could wind up working with a lawyer for months or years to get it resolved. The number of delaying tactics available when a problem goes to court are huge. In contrast, mediation may take a matter of weeks from the time you decide to start the process to reach an agreement.

When Mediation is the Most Useful

There are times when mediation just won't help: if you're facing a problem with a client or a vendor who is not acting in good faith, going through mediation is not likely to result in an agreement that actually helps you out. Even if you do come to some sort of agreement, it's non-binding, which means that the individual or organization you're up against can simply ignore it.

But, provided that both parties are acting in good faith and just want to get the matter resolved, mediation can prove a much simpler approach than taking things to court. Mediation proves most useful in situations when there's an issue of interpretation (like just what a specific clause in a contract really means) rather than when the issue is that someone is simply refusing to carry through on the contract at all.

Photo credit: Some rights reserved by Andresrphotos.

New Study Reveals Surprising Information About Freelancers

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2011 Freelance Industry Report

Tens of millions of workers remain unemployed around the world. But the freelance segment of the workforce is not only growing, it’s actually thriving.

That’s just one of the many interesting facts I uncovered when I recently surveyed more than 1,200 freelancers in 37 different professions.

The findings of this survey are summarized in the just-released 2011 Freelance Industry Report, which is sponsored by the International Freelancers Day online conference.

This 53-page study (which is available free here) uncovered some very surprising and encouraging information about who freelancers really are, what we charge, how we work, what our biggest challenges are, how we feel about the solo path and why we do what we do.

Among the most interesting insights:

• Women compose the largest group of freelancers (67%).
• Most freelancers are seasoned pros: 28% of solo professionals have 10 or more years of experience freelancing. Fifty-one percent are the primary income earners in their households, and 17% freelance on the side while holding a full-time day job.
• Freelancers prefer the independent lifestyle. Forty-eight percent of freelancers have more free time now than they did as an employee. Additionally, 59% are happier now than they were before going solo.
• A traditional job? No way! Fifty-four percent of freelancers wouldn’t even consider working as an employee again, regardless of what the job paid or what it entailed.
• Finding clients was the biggest challenge facing freelancers today (cited by 22% of participants). Interestingly, obstacles such as getting paid on time (4%) and competing against lower-cost freelancers (3%), which are commonly cited as having reached alarming levels, were not among the top-ranking concerns for freelancers in 2011.
• Freelancers earn healthy rates for their work. Although the range varies widely, 40% of freelancers command $50 to $99 per hour. And 17% earn $100 or more per hour.
• Women tend to earn more. In fact, women freelancers out-earn their male counterparts in every rate level from $11 to $89. It’s not until the $90+ per-hour range that men out-earn women (something that definitely needs to change).
• Europeans are more likely to work long hours. Freelancers in Europe (40%) are the most likely to work 40 or more hours every week. That’s considerably higher than their North American (32%) and Asian (28%) counterparts.
• The economy’s impact on freelancers has not been quite as severe as reported. The majority of freelancers (52%) either have not been impacted by the economy or have faced only a very minor impact. Only 19% said that they have been significantly affected.
• “Accidental” freelancers faring well. Professionals who are freelancing as the result of a layoff or being downsized are more likely to earn less as a freelancer than peers who planned their way to self-employment. However, 80% of these “accidental” freelancers are much happier now than they were as employees. Seventy-four percent of them are also optimistic about their business prospects. And fully 30% of them are earning $80 or more per hour.

And that’s just a glimpse of what’s in this study.

The remarkable thing about these figures is that you’d be hard-pressed to find any information about this rapidly growing segment of the workforce and how they’re doing in this economy.

There’s minimal published information about independent workers. And no one is really talking about the millions of professionals in fields as diverse as engineering, web design, business consulting or software development who are earning a great living and enjoying a more balanced lifestyle.

Let’s Change the Perception of Freelancers!

It’s time to change this trend. So do yourself a favor and download your free copy. Take a look at the information and analysis. And if you like what you see, pass it around to fellow freelancers (or just point them to the download page). Every freelancer, consultant, solopreneur and self-employed service provider out there should have a copy of this report.

Better yet, send this to your government representatives. Freelancing needs to be part of the economic-improvement conversation at all levels of government!

And if you know someone in the media, pass it on. It’s time to show the world that freelancers are a vital segment of the workforce and the economy.

Thoughts? Questions? Comments? I’d love to hear from you in the comments area below.

For additional statistical information about Freelancers, as well as robust analysis, you can check out FreelanceSwitch’s own Freelance Confidential over at Rockable Press.

Tom Wujec: Build a tower, build a team

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View engaging conference lectures, interesting how to discussions, and high quality freelance advice via video here on FreelanceSwitch.

This week we look at Build a tower, build a team by Tom Wujec. In this video he presents some surprisingly deep research into the “marshmallow problem” — a simple team-building exercise that involves dry spaghetti, one yard of tape and a marshmallow. Who can build the tallest tower with these ingredients? And why does a surprising group always beat the average?.

Linkswitch #86, Conference Pricing, Secret Formula, Inner Calling

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International Freelancers Day — It's About Time!

International Freelancers Day (IFD) is a global initiative to celebrate independent workers, their entrepreneurial spirit and the tremendous impact they have on economic growth. The celebration will center on a free online conference of the same name.

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Is Conference Pricing Out of Control?

You've surely experienced the letdown of registering for a conference, only to find that it costs $1,000 (or more) to attend (not including travel expenses). Isn't that a bit extreme for two days worth of training? Then again, is that the only way the conference organizers can cover the high costs of planning such an event? Let's see…

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Freelance Freedom #225: Proofread Again

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