In the world of freelance Web design and contract programming, it's not unheard of for client and contractor to come to (virtual) blows. And it's not unusual for a freelancer to be burnt when a client refuses to pay up, citing one excuse or another. And what can you do about it?
If a contract only amounts to a few thousand dollars, litigation to recover your fee can be far too expensive, and an increasingly vituperative exchange of emails is often not enough for client and contractor to come to agreement over who owes whom what.
Into this gap steps judge.me: A start-up founded by Peter-Jan Celis that aims to provide internet-based, legally binding arbitration services with a particular eye on settling the conflicts that arise over freelance development and Web design.
Celis describes judge.me as a "small claims court on the internet". "What this means is that we offer international arbitration that is legally binding in 146 countries, but by keeping things as simple as possible (but not any simpler) we offer all the benefits of high end arbitration in a streamlined, low cost package of only $149.5 per party," Celis says.
"What this means in practice is that our arbitration hearings are completely email based, so the entire process is asynchronous and location independent. When parties file a case, judge.me assigns an arbitrator based on the case description parties provide.
"The arbitrator than guides the parties through the entire case hearing, which generally consists of 5 steps: opening statements, evidence, arbitrator questions, closing statements and arbitral decision ('award')."
Celis pitched the idea to the Startup Chile incubator program, which accepted the proposal; the service launched on 17 January this year. So far Startup Chile has provided judge.me's only funding other than fees from customers of the service.
"I pitched the idea as a small claims court on the internet with particular usefulness for software development and design projects, which tend to have a lot of disputes with regards to project delays and non-paying customers," Celis says. "Startup Chile really likes ideas that are scalable and international in scope, so judge.me was a great fit for the program."
Celis was inspired by an interest in private law, "because it deals with the fascinating issue of how free markets can manage negative externalities".
"I got convinced that as over time people start caring more about their reputation online, there was potential for private internet services to create a new legal system based on ostracism; i.e. warning the community not to do business with people who refused to make the prevailing party whole after losing an arbitration.
"So knowing I wanted to launch an arbitration service, but realising no new service had the clout to apply ostracism effectively, I took a course at CIArb — the Chartered Institute of Arbitrators — to learn how recognition and enforcement of arbitral awards works in the current legal framework for international arbitration. Last but not least, I decided to target the underserved low end of the market because that is the best way to launch a disruptive innovation."
The advantages of judge.me over litigation or 'offline' arbitration services are that it's cheaper, faster and more convenient, Celis says.
"If you are doing business internationally, or with people with assets in multiple countries, the benefit of our international arbitration over your local small claims court is also that our arbitral awards are recognised and enforced in 146 countries.
"Our arbitrators are of exceptional quality; our arbitration roster even includes some former partners at international law firms and well published legal scholars — all of those people love the judge.me vision so much they are happy to work well below their market rate."
Arbitrator profiles will soon be added to the site, and users will be able to specify a particular arbitrator in contract clauses. "For an arbitration service charging only $299 in total, this level of service is unprecedented," Celis says.
Interest in the service has "exploded" over the last month or so, Celis says, with judge.me generating discussion on reddit and Hacker News.
The number of actual cases brought to the service is still low, though Celis notes that there is a lag between an arbitration clause being included in a contract and case filing. Disputes that have been resolved by the service include parents of a quickly divorced couple disputing the payment of the wedding, an issue between a tutor and one of his students and a dispute between a freelance consultant and a client.
Interest has also been evident in the number of queries about sample contracts and arbitration clauses. "There also have been around a dozen case filings where the filer completed everything but the responder refused to accept arbitration," Celis says. "Those filers are now well aware of the need to use my arbitration clause pre-dispute and it reinforces the need for me to educate the market about this."
The ultimate aim of judge.me is to become "the platform for polycentric law on the internet". "What I mean by that is that as reputation becomes more important online, it will be possible for arbitration services such as judge.me to enforce the awards not by using the court system but merely by ostracism, i.e. calling out losing parties who did not pay up to make the prevailing party whole again.
"If this happens, a pure private order can arise online where arbitrators build reputations, case law and even group in ideological groups that users can follow or ignore. (This self-selecting group effects results in different laws for different communities based on supply and demand, hence polycentric laws.)
"It's a very exciting prospect and with judge.me I hope to be on the forefront of this wave towards decentralized civilisation." Celis is working on judge.me full time. The incubation period with Startup Chile has ended, and Celis is heading to Chicago to participate in Code Academy to brush up on his Ruby on Rails skills. He is aiming for profitability over the next six months, then he will apply for a place in an incubator like Ycombinator or TechStars.