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Iris Bennett obtained an NPA for Florida Defense Company

IAP Worldwide Services Inc, a Florida defense and government contractor was represented by Iris Bennett of Smith Pachter with her partner Joseph Covington relating to a criminal investigation surrounding the company’s involvement in a conspiracy to pay bribes to officials in Kuwait to secure a government contracts in violation of the Foreign Corrupt Practices Act (FCPA). Bennett and her partner successfully negotiated a non-prosecution agreement with the Department of Justice for IAP this last June to resolve criminal charges against IAP.  Iris Bennett focuses her practice on investigations and white collar criminal matters. Before private practice she clerked for two federal judges and served as a federal public defender in the District of Columbia. The company agreed to pay a $7.1 million dollar penalty.  The agreement also called for continued cooperation by IAP and mandates that the company adopt a strict anti-corruption stance and create appropriate structures, systems and procedures to prevent corruption. The company will also regularly need to report to the Criminal Division regarding compliance. An ex-VP for the company, James Rama, was the only individual charged and he pled guilty to one charge of violating the Foreign Corrupt Practices Act (FCPA). No other high level executives were individually charged which was a strong focus in the defense argument at sentencing that took place this last October when Rama was ultimately sentenced to a significant jail term.  Read about the sentencing here.  One has to wonder what the outcome would have been to this company and its more high level executives post Yates memo if they hadn’t resolved this case in June? The drama all began in 2004, when the Kuwaiti government rolled out a plan called the Kuwait Security Program (KSP), which was designed to help national agencies surveil using closed-circuit TV. The project would involve a two-phase roll out. First would come a feasibility test, then an installation period. The Kuwaiti Ministry of the Interior helped choose contractors and planned to collect substantially more revenue in the installation phase (Phase II) than in the feasibility test phase (Phase I).   However, Rama and IAP (who later admitted to these facts in the non-prosecution agreement) made a play to work on the first phase so they could secretly tweak the requirements for the second phase to favor IAP and thus give the company a competitive advantage when it came to bidding. They created a fake company (“Ramaco”) to try to win the Phase I business without disclosing conflict of interest and won that bid, which was worth $4 million. Rama and IAP then diverted approximately $1,783,688 of that money to a consultant to bribe Kuwaiti officials and then funneled money to IAP from Ramaco through different accounts and contacts. The resolution is certainly a job well done by Iris Bennett and her partner. Congrats! The post Iris Bennett obtained an NPA for Florida Defense Company appeared first on Women Criminal Defense Attorneys.
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Women Criminal Defense Attorneys: Interview with Amy Walsh

I recently had the privilege of interviewing Amy Walsh, a partner in the New York office of Morvillo LLP. Amy represents individuals and institutions in government investigations, enforcement actions, and prosecutions conducted by various government agencies. She was recently appointed as a monitor in the JPMorgan Chase’s settlement with the DOJ. Prior to entering private practice, Amy was an Assistant United States Attorney for 12 years in the United States Attorney’s Office in the Eastern District of New York and was former Chief of the Business and Securities Fraud Section. Amy frequently publishes and speaks on various topics related to her practice, and has been named regularly in Super Lawyers in the area of white collar defense. I am thrilled to introduce you to Amy Walsh. She reminds us all that you don’t need to be a partner in BigLaw to be breaking the glass ceiling in white collar corporate work. Susan Bozorgi: What inspired you to become a criminal defense attorney? Amy Walsh: I was inspired to practice criminal law – first as a prosecutor, then as a defense attorney – when I was clerking for a federal judge. Although the civil cases were intellectually interesting, the stakes are so much higher for someone who could lose his or her liberty that the work seemed much more meaningful to me. SB: You are the only woman partner at your firm, which is typical for many women working in small to mid-size firms. How, if at all, does this shape your work or role in the firm? AW: Women often bring a different perspective to various aspects of a law practice: how to interact with a particular client, how to articulate an argument in front of a particular judge, and how to generate business. I’ve found that if the men in the room value that different perspective – and all of my law partners do – it can greatly enhance relationships with clients, other lawyers and professionals within the firm. SB: What do you think it takes to make it in private practice? Is the advice different for a woman? AW: I’m not sure the advice would be different for a woman or a man, but my advice is threefold: (1) Work on as many matters as possible, because, in my experience, work begets work; (2) No matter how busy you are, stay 100% on top of your matters and your interactions with other lawyers. (There’s nothing that turns a potential referral source off more than getting the impression that you don’t have your act together because it takes days to get a return email or you haven’t mastered the facts of the case); (3) Develop and nurture as many relationships with other lawyers as possible, which means connecting with lawyers that you’re working with at other firms, then following up with them and anyone else you know to go out to lunch, dinner, drinks, or whatever activity you think would be relaxing and fun to do together. SB: What has been your most successful business development strategy? AW: I love to socialize, so for me it has been developing relationships with other lawyers where we can have fun in an informal way but also can brainstorm about issues that are coming up in our cases. I actually think that this aspect of business development is something that women naturally thrive at, but the key is to realize that there’s no reason to be shy about asking someone to have lunch or expressing an interest in working together. Women usually want to work together! SB: Did you have women mentors? How did they — or the absence of women mentors — impact your career? AW: I had lots of women role models, but not necessarily a woman mentor. When I was in the US Attorney’s Office, I spent a lot of time watching other lawyers try cases and watching judges on the bench. For me, there was nothing better than identifying a style that I liked and thought could work for me, and then modeling my behavior after that style. There were many women AUSAs and judges in the EDNY that I admired and modeled my behavior after (and still do). SB: Of the women that you admire in the field, what do you find inspiring about them? AW: What inspires me most about the women I admire is their fearlessness. Which doesn’t mean that they’re jerky or arrogant. What it means is that they’re not afraid to take on a new case in an area that they’re not already an expert it; they’re not afraid to socialize in a room full of strangers and connect with at least a couple of people; and they’re not afraid to fail and try again. SB: What is the road you would advise best prepares a young woman to have her own white collar criminal defense practice one day? AW: I might be showing my bias for the path that I took, but I think it’s being a prosecutor. Working as a prosecutor gives you the greatest opportunity to try cases and enables you to understand in the pre-indictment phase how a prosecutor will react to certain arguments. Both of these skills are critical to representing clients in the white collar defense world. SB: I see that you were recently appointed to act as a monitor for JPMorgan Chase in one of its settlements with DOJ. How have you found that work? AW: The monitorship has been an incredibly interesting and rewarding experience so far. Acting as a monitor is very different from the usual role of acting as an advocate. ...
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Amid Controversy, Same-Sex Marriage Is Legal in Ala.

Alabama was the source of a good bit of controversy surrounding same-sex marriage last week, after a federal judge declared the state's law prohibiting same-sex marriage unconstitutional. Right after that, however, the Alabama Supreme Court's Chief Justice Roy Moore issued his own order telling state judges and employees not to recognize same-sex marriages or issue licenses. Moore's conflicting order led to questions about who trumps whom when it comes to federal trial courts and state supreme courts, but the U.S. Supreme Court put the issue to rest by refusing to review the case. What's going on down in Alabama? Same-Sex Marriage Is Constitutional -- Maybe On January 23, a federal trial judge in Alabama struck down Alabama's same-sex marriage ban as unconstitutional. The state refused to allow one of the women in the case to adopt the other woman's son because it didn't recognize their marriage as valid. Citing to recent same-sex marriage decisions, including the U.S. Supreme Court's 2013 ruling in U.S. v. Windsor, Judge Callie V.S. Granade concluded that Alabama's law violated the Equal Protection Clause of the U.S. Constitution and ordered the state to no longer enforce the ban. Granade's order set the stage for Alabama to become the 37th state to permit same-sex marriage -- except that, on February 3, Alabama Supreme Court Chief Justice Roy Moore issued a memo to state probate court judges (who are in charge of marriages) indicating they weren't bound by the federal court decision, which Moore said was contrary to state law. On February 8, he ordered probate judges and state employees not to recognize same-sex marriages. Legal scholars tend to agree that Moore's opinion doesn't override a federal judge's opinion. Moore is no stranger to making controversial decisions. He was removed as chief justice in 2003 when he refused to obey a federal court order to remove a Ten Commandments monument from outside the courthouse, but Alabama voters returned him to office in 2012. The Supremes Decide Not to Weigh In The U.S. Supreme Court implicitly affirmed Granade's order on Monday, when it refused to grant an emergency petition by Alabama's attorney general to stay Granade's decision, which would have suspended the issuing of marriage licenses in the state. Justices Thomas and Scalia dissented, arguing that the state law should have been stayed to allow a federal appellate court to weigh in. The dissent also took time to criticize the Court's recent practice of not staying a federal appeals court's order when it finds a state law unconstitutional. With the U.S. Supreme Court out of the picture, Alabama counties began issuing marriage licenses -- well, most of them, anyway. According to The New York Times, some Alabama courts protested the decision by not conducting any marriages at all. Related Resources: Confusion in Alabama as Some Defy Court Order to Grant Gay Marriage Licenses (Los Angeles Times) Ark. and Miss. Gay Marriage Bans Struck Down (FindLaw's Law and Daily Life) Same-Sex Marriage Returns to Supreme Court: 3 Things You Should Know (FindLaw's Law and Daily Life) Gay Marriage Update: Kan., Mo., and 6th Circuit (FindLaw's Law and Daily Life)
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Women Criminal Defense Attorneys: Interview with Nina Beattie

This week, I had the pleasure of interviewing Nina Beattie who is a partner at Brune & Richard in New York City. Nina is an experienced litigator who focuses her practice on representing individuals and entities in white-collar criminal and regulatory matters. Many of her clients are from the financial sector both in the United States and abroad. She won an acquittal at trial for one of the defendants in the Bear Stearns hedge fund case and she remains at the forefront of representing clients in what is now a highly scrutinized industry. Nina graduated from Yale Law School in 1996 and before joining Brune & Richard, she clerked for a federal judge in the Southern District of New York, and worked at the Capital Defender Office. She has been recognized as a leading lawyer in her field by Chambers USA, which describes her as an “extraordinarily gifted lawyer who is very smart and tremendously hard-working.” She has also been repeatedly identified as one of New York’s top white-collar defense attorneys by Super Lawyers. Nina is a tireless advocate for her clients who are lucky enough to have her by their side and I am thrilled to introduce her to you. What do you love most about being a criminal defense lawyer? Getting to know my clients, mastering complicated fact patterns, and working in a very dynamic area of the law. Also, that the stakes are high – that what I do and how I do it matters a lot. Of course, that is also what keeps me up at night. Much of your practice is focused on white-collar defense and representing clients in regulatory matters. What are some of the challenges you face in white-collar cases? In a white-collar case, there are usually multiple governmental agencies (not to mention plaintiff’s firms) investigating the client. For example, in a typical financial fraud case, a lot of attention is often focused on the role of the United States Attorney’s Office or some other criminal prosecutorial agency. But often times, the SEC, FINRA or the CFTC is conducting its own parallel investigation or proceeding; and, today, various state agencies – such as the New York State Department of Financial services – as well as US Senate committees can be in the mix, too. In some of the more recent financial crime cases – such as those involving LIBOR and foreign currency manipulation – there have been international regulatory and prosecutorial bodies involved as well, which has added a new layer of complexity. The challenge comes in when the various entities are not truly coordinated, as is often the case.  If a client does agree to be interviewed or give testimony, it’s likely that he or she may end up giving statements multiple times over a number of years to various different entities and parties. Navigating the best course, knowing that there will be multiple competing considerations, can be quite challenging. Do you think that women bring unique skills or attributes to defending the criminally accused? It’s hard to say. There are a number of traits that I think are crucial for any successful criminal defense attorney to have. Some of those – such as being able to listen well, being empathetic, or being detail oriented – are often associated with women, for one reason or another. But plenty of men have those traits as well. Have you had women role models and how has this impacted your career? I have had women role models throughout my legal career, and they have been very important to me. When I graduated from law school, I clerked for the Hon. Kimba M. Wood of the Southern District of New York, and the experience of working for her still inspires me. She is both a brilliant and forceful jurist and a wonderfully kind and down-to-earth person. I try hard to emulate her. What kind of struggles do you think that women in the field have to deal with that our male colleagues do not? I was once told in a job interview that I couldn’t do the job because I had a child. I responded that I guessed he, the interviewer, didn’t have any children. He said that he had three children, but it was very different because he had a wife. In fact, he said, he had two wives, an ex-wife and a current wife! I think having to overcome obstacles in life can make you a better advocate.  You can’t let one individual’s foolish opinion stop you from succeeding.  I focus on getting results for my clients and leave the rest behind. ...
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What’s the Difference Between Support Animals, Service Animals?

You may think that "support animals" are just another name from "service animals," but there's a fine legal distinction. A recent federal court decision put a fine point on the difference in a man's legal battle with a Florida homeowner's association. His HOA's "no pet" policy couldn't be applied to the man's service animal because service animals are not pets -- especially when they are trained to address a condition like PTSD. So when is an animal a "service animal" and when is it a "support animal"? ADA Definition of 'Service Animal' The legal foundation for allowing animals where pets aren't normally allowed is via accommodation for persons with disabilities. The Americans with Disabilities Act (ADA) covers accommodation for disabled persons in employment, transportation, and in government, with similar statutes covering housing and public accommodations. The U.S. Department of Justice has clarified its position on when ADA protections apply to animals or whether they are just pets. According to its guidance, "service animals" are: Only dogs Which are individually trained to do work or perform tasks For a person with a disability. Not every impairment is considered a disability under the ADA, but if it is a physical or mental impairment that substantially limits a person from participating in "major life activities," it probably qualifies. This includes psychological impairments like PTSD. Dogs or other animals which are not trained to do work or perform tasks for persons with these disabilities are essentially just pets. Support Animals Certainly it would be hard to deny that many untrained animals can give enormous support to those in pain. But these "support animals," regardless of their calming effects on their owners, are not necessarily ADA-compliant "service animals." Ask an Oklahoma woman who decided to get a "therapy kangaroo" -- not a service animal under the ADA. Since the ADA provides no rights or protections for animals outside the service animal mold, extra protections for "support" animals may be left to states, cities, or even individual businesses. Airlines have been somewhat looser in allowing support animals of all shapes and sizes onboard, much to the frustration of some passengers and crew. A cottage industry has also sprung up around service or support animal vests and tags, none of which are regulated by the ADA and many of which are misleading. But here's the bottom line: Service dogs are not pets, they work or perform tasks for people with disabilities. Related Resources: Blind Man's Dog Blamed for Flight Cancellation (FindLaw's Law and Daily Life) School to Pay $10K for Denying Disabled Student's Service Dog (FindLaw's Law and Daily Life) Legal to Ban a Customer's Service Animal? (FindLaw's Free Enterprise) Can My Dog be a Service Animal? (FindLaw's Law and Daily Life)
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Don’t Be a Victim in Your Divorce: 5 Empowering Legal Tips

Often in divorce, one ex-spouse can become shellshocked by the process. Paralyzed by fear over family and financial woes, these former partners can cast themselves in the roles of victims. Writing for ABC News, Laura Mattia of the Baron Financial Group believes that women often become financial victims during divorce because of the way they relate to their spouses during marriage. But divorcing spouses can empower themselves when it comes to financial and family situations, rather than taking a sideline in their own divorces. For both women and men, take note of these five empowering legal tips and avoid becoming a victim in your divorce: 1. Be Proactive About Finances. Be proactive about your finances from the start of your marriage through your divorce -- for example, by using a prenuptial agreement. One of the many benefits of a prenup is the ability to delineate who owns what in a marriage and afterward. Even if you're already married, a postnup can accomplish many of the same financial planning goals. 2. Pay Attention to Tax Returns. If you're going through a divorce, do not hand off the responsibility for filing your tax return to your soon-to-be-ex spouse. You should try to communicate with your partner about which tax options are the most beneficial for both of you (if necessary, through your attorneys or a mediator). Doing this will help you avoid being blindsided when you learn that your spouse claimed all your kids as his dependents. 3. Consider Your Long-Term Security. Mattia cautions against relying too heavily on alimony, as it may leave a divorcee financially dependent on her ex. Craft a divorce settlement that covers you and your family's long-term plans (even your kid's college tuition) and that doesn't leave you praying for a spousal support check every month. 4. Stay Smart on Social Media. Don't bad-mouth your ex on social media. Just don't. Not only will it give your former spouse fodder for trashing you in court, but it won't do much for your self esteem either. Instead, consider a social media clause in your prenup or postnup. 5. Hire an Attorney. You know what's the most empowering feeling? Knowing the law is on your side. And you'll only know that for sure with an experienced divorce attorney's help. You don't have to be a victim in your divorce. Use the law to rise above. Related Resources: 5 Things a Divorce Lawyer Can Do (That You Probably Can't) (FindLaw's Law and Daily Life) A 'Happy' Divorce? 7 Ways to Make It Less Stressful (FindLaw's Law and Daily Life) Facebook, Social Media Use Linked to Divorce Rates: Study (FindLaw's Law and Daily Life) Have a Happy, Healthy... Divorce? (FindLaw's Law and Daily Life)
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Gay Marriage Legal in Wisconsin and Indiana: 7th. Circuit

Wisconsin and Indiana gay couples were vindicated today by a Seventh Circuit ruling that found both states' gay marriage bans unconstitutional. In a unanimous decision, the federal appellate court found that neither state was able to provide a rational basis for the same-sex marriage prohibition, leaving it to unconstitutionally deny gay couples equal protection of the laws. The Associated Press notes that with this new decision, the number of states with legalized gay marriage jumps from 19 to 21. What else is important about this gay marriage decision? Gay Marriage Now? In June, both Wisconsin and Indiana had their states' gay marriage bans ruled unconstitutional in federal court. In both states, marriages began shortly after each respective federal district court decision, allowing hundreds of gay and lesbian couples to wed. However, upon accepting both appeals, the Seventh Circuit had stayed these decisions, effectively putting marriages on hold until it came to a decision. Now the Seventh Circuit has come to a decision, so it appears that -- absent an emergency stay from the Supreme Court -- gay marriages can begin again in either state. New Test for Discrimination The traditional test for finding a law unconstitutional for violating the Fourteenth Amendment's guarantee of equal protection was to turn to the three levels of constitutional scrutiny. Many courts have chosen to elevate gays and lesbians to a quasi-suspect class, giving laws which discriminate against them a higher level of scrutiny. Others have chosen to apply the lowest level of scrutiny (rational basis) and still find the laws lacking. In its opinion, the Seventh Circuit sought to clear the air with a new inquiry for testing whether laws are unconstitutionally discriminatory: Does it discriminate against a historically prejudiced group, resulting in harmful, unequal treatment? Is the discrimination based on immutable or tenacious characteristics? Does the law provide an important offsetting benefit to society as a whole? Is the law overinclusive or underinclusive in providing that benefit? In answering these questions with regard to Indiana and Wisconsin's laws, the Seventh Circuit found they discriminated against a group that has been historically prejudiced (gays), who cannot and should not change their orientations. It also found that both states' reasons for denying gays marriage (childrearing and possible future harms) were either illusory or were poorly tailored in light of the reality of families in both states. Near the tail end of its opinion, the Court reminded America that "[m]inorities trampled on by the democratic process have recourse to the courts; the recourse is called constitutional law." Related Resources: Appeals court nixes Indiana, Wisconsin gay marriage bans (USA Today) Ky.'s Gay-Marriage Ban Struck Down; Judge Stays Own Ruling (FindLaw's Law and Daily Life) Idaho's Gay Marriage Ban Struck Down; Gov. Vows to Appeal (FindLaw's Decided) Ind. and Wis. Same-Sex Marriage Cases Preview, Hearing Rescheduled (FindLaw's U.S. 7th Circuit Blog)
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Legal How-To: Getting Back Pay That’s Owed to You

If your employer has violated federal or state employment laws, you may be owed back pay. Back pay is typically the remedy for wage or hour violations, making up the difference between what an employee was actually paid and what he or she should have been paid. How can you get your hands on back pay that may be owed to you? Here are a few general considerations: Fair Labor Standards Act Violations One common source of back pay awards are violations of the Fair Labor Standards Act (FLSA). The FLSA sets federal rules for working conditions and generally also set the minimum standard for states' own employment guidelines. According to the Department of Labor, back pay can be recovered for violations of the FLSA by way of Wage and Hour Division enforcement, a lawsuit, an injunction brought by the Secretary of Labor, or a private lawsuit. In one recent example, the social networking company LinkedIn agreed pay almost $6 million in back pay and damages to employees to 359 employees who were allegedly denied overtime pay in violation of FLSA. In that case, the company agreed to a settlement after an investigation by the Department of Labor discovered the violations. Workers who have a complaint about possible wage and hour violations can submit confidential reports to the Department of Labor's Wage and Hour Division by phone or online. State Law Claims Back pay may also be awarded for violations of state employment laws, which like federal employment law, may typically be enforced by filing a complaint with state labor authorities or pursuing a private lawsuit. Case in point: a cheerleader for the NFL's Oakland Raiders who filed a lawsuit earlier this year alleging violations of California's minimum wage law and a California employment law that requires workers be paid at least twice a month. The lawsuit claimed that cheerleaders were paid less than $5 an hour for work they were contractually obligated to perform in addition to their game-day duties --such as appearances and photo shoots -- and weren't paid at all until after the season was over. If successful, the disgruntled Raiderette could recover damages including both penalties and back pay for the difference between her wage and California's minimum wage as well as any unpaid overtime she was obligated to work. Need More Help? If you believe that you are entitled to back pay, an employment attorney can help ensure that you get everything you're owed. Are you facing a legal issue you'd like to handle on your own? Suggest a topic for our Legal How-To series by sending us a tweet @FindLawConsumer with the hashtag #HowTo. Related Resources: Who Has the Highest Minimum Wage? (FindLaw's Law and Daily Life) Second Raiderette Joins Wage and Hour Lawsuit (FindLaw's California Case Law Blog) Walmart Sued by Temporary Workers for Wage and Hour Violations (FindLaw's Courtside) Chickie's & Pete's Settlements: $8.5M for Wage, Tip Violations (FindLaw's Decided)
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La.’s Gay Marriage Ban Upheld by Federal Judge

Louisiana's gay marriage ban has been upheld in a federal court, bucking a year-long trend of federal rulings against same-sex marriage bans. In Robicheaux v. Caldwell, U.S. District Court Judge Martin L. C. Feldman ruled Wednesday that Louisiana's prohibition on gay marriage did not violate same-sex couples' constitutional rights because the law implicates no fundamental rights and has a rational basis. As noted by The Huffington Post, Judge Feldman is the first federal judge to uphold a gay marriage ban since the U.S. Supreme Court's ruling in Windsor in 2013. Why did Louisiana's gay marriage ban get upheld when so many others have been struck down? Judge Finds Rational Basis for Ban Although the result may be surprising, Judge Feldman is not the first judge to apply rational basis review to state gay marriage laws. This lowest level of constitutional scrutiny only asks that the challenged law have a rational basis -- meaning a rational link between a legitimate interest and the law. Unlike other levels of judicial scrutiny, the burden is on those challenging the law to prove that it lacks any rational basis in order for it to be found unconstitutional. Other federal courts have used this low level of scrutiny but with opposite effect, finding that a state's law barring gays from marrying lacked any rational basis. However, this trend has been based on these courts rejecting arguments which had been successful in court one decade prior: that opposite-sex couples are better at child-rearing. And while a panel of the 7th U.S. Circuit Court of Appeals recently gave a public tongue-lashing to those who espouse those views, it was crucial in this Louisiana decision. Judge Feldman wrote, "This Court is persuaded that Louisiana has a legitimate interest... whether obsolete in the opinion of some, or not, in the opinion of others... in linking children to an intact family formed by their two biological parents." Although this kind of social rationale has often been dismissed as crockery since California's Prop 8 case, there is no controlling federal ruling that prevents it from being accepted as a rational basis. Appeal to 5th Circuit This decision doesn't change much for Louisiana's same-sex couples, but it is still likely to be appealed to the 5th U.S. Circuit Court of Appeals for review. The 5th Circuit is also scheduled to review Texas' gay marriage decision, which struck down the law as unconstitutional in February. Related Resources: Federal judge upholds La. gay-marriage ban (The Associated Press) Utah's Gay Marriage Ban Is Unconstitutional: Federal Judge (FindLaw's Decided) Tenn. Court Upholds Gay Marriage Ban: Is 'Pro-Gay' Trend Over? (FindLaw's Decided) Oregon's Gay Marriage Ban Struck Down, Effective Immediately (FindLaw's Law and Daily Life)
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Ed. Dept. Wants ‘Borrower-Focused’ Student Loan Servicers

The U.S. Education Department made a student-friendly move on Friday, announcing it would renew focus in its contracts with student loan servicers on being "borrower-focused." Undersecretary of Education Ted Mitchell noted in an interview that the new student loan servicers would be put "on notice" that they have to be more consumer friendly, reports The Wall Street Journal. The new federal contracts even provide quarterly bonuses for servicers who have lower rates of borrower delinquency. What does this shift mean for America's student loan borrowers? Fighting Default With Better Loan Service Part of the reason for this shift in federal policy is the alarming increase in both student debt and default rates. According to New York Federal Reserve data (as reported by the WSJ), approximately one in four borrowers who have loans are "at least 90 days behind on student loan bills." Combine that with the fact that over half of Americans are still paying off their student loans, and you have a recipe for disaster. Trying to stem this tide of defaults, the Education Department has announced it has renegotiated contracts with major student loan servicers in order to incentivize working with borrowers to avoid default. According to a recent press release, these incentives include: Increasing the weight of borrower customer satisfaction in performance metrics for servicers; Payment structures which are tied to servicers' success in keeping borrowers in on-time repayment and avoiding default; and "Additional incentives" aligned with reducing payment delinquency across each servicer's portfolio. Secretary of Education Arne Duncan noted that borrowers "deserve high-quality support from their federal loan servicer[s]," and hopefully these changes will help provide better service. What Should Borrowers Do? The renegotiation of federal servicer contracts includes big names like Nelnet Servicing, LLC and Pennsylvania Higher Education Assistance Agency. Even if you don't have either of these servicers, watch your inbox and check out your servicer's website to make sure you aren't missing out on an easy way to reduce your payments or avoid default. Related Resources: Feds Overhaul Servicing Contracts (Inside Higher Education) Legal How-To: Getting Student Loans Forgiven (FindLaw's Law and Daily Life) 5 Strategies to Manage Your Student Loans (FindLaw's Law and Daily Life) Why Settling Student Loan Debt Is So Difficult (FindLaw's Law and Daily Life)
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