oddsod - 8:40 pm on Mar 11, 2010 (gmt 0)

If he says no then sure, he has the code but that will always be the case whatever option is used.

Not so. With a properly constructed contract, he gets the code only after he's made a non-refundable full payment to your lawyer.

He tells the lawyers to transfer the funds

If you are using a legal firm for escrow ...why the split transaction and release the code early?

And, as maximillianos says, once it's gone, it's gone.