Add a requirement to the contract that states you have access to all source (.psd, database or code) while it is being developed. If the developer bails, atleast you have 1/2 a project that someone else could takeover. This isn’t a glorious solution obviously.

While the traditional option would be to ask for a quote that has estimated hours / activity (database, architecture, design, etc) and/or work on a hourly rate, you could turn this concept on its head and come up with a ‘pay-for-performance’ model based on the initial quote if the developer is agreeable to it. Assign dollar values to each core requirement which the developer earns only after it has been tested / approved by yourself. You’d need to seed a little upfront money for database and architecture work, but it backend loads the contract based on delivery which is good for the customer.

Above all else, make sure you have a signed legally binding agreement, which makes the disaster scenarios you are currently facing that much more manageable if you have to go through small claims court – if dealing with amounts less than $10,000. I have had to use it on one occasion to get money I was owed and it wasn’t nearly as bad as I thought. It took approximately 3 weeks when all was said and done. http://www.ontariocourtforms.on.ca/english/scc has all the forms and links to answer questions.

References do help. Most freelancers request a good faith deposit, but if you’re not comfortable with that, you’ll also find workers willing to wait until the job is done for payment – sometimes that’s motivation enough.

It might also be the forums you’re trolling. Don’t laugh, but Craigslist is a great place to find serious workers – but do look at resumes and ask for references to weed out the flakes.

I haven’t ever gotten references before, and that is a great tip, though I don’t know about you, but I’ve used “semi-bogus” references before to secure a job. You know, that friend that is willing to say he was your supervisor at Company-X, even if he was only your co-worker… I doubt I could trust a reference if the person is untrustworthy.

Bigger projects I think still require more contact. Maybe even a face to face. You need ways of checking up on them. Also once you have decided to work together – very clear and concise guidelines on what work will be done by a specific date for a specific amount of money.

Did you get references? Hiring someone online should be no different from hiring someone offline. References and a portfolio are a must.