$600,000 Legal Tab in CFP Board Lawsuit?
The CFP Board says it has logged more than 2,000 hours of legal work through April 7 -- racking up what one outside expert estimates is at least a $600,000 bill -- responding to a lawsuit by two Florida planners.
That amount would be equal to about 2% of its annual $23 million budget, most of which comes from annual fees paid by its 70,000 CFP holders.
The board revealed the number of hours in an April 7 filing with the Federal Court in the District of Columbia, in which it opposes the planners' request that the court force the board to turn over documentation immediately.
Lawyers for the planners wrote in a court filing last month that the board's failure to meet its earlier time projections for the production of documents has left the case at "a standstill."
In the April 7 filing, the board responded that the planners' "hyperbolic contentions are completely unfounded. Plaintiffs are attempting to manufacture a discovery dispute where none exists."
The board added that it was taking far longer than it had estimated to sort through some 60,000 documents, and that lawyers were working nights and weekends to comply.
In a statement Thursday, the board said it was now preparing to turn over 25,000 documents.
David Min -- an assistant professor of law at the University of California at Davis who is familiar with the board's Washington D.C., law firm Holland & Knight -- estimated that the board could be paying an average of $300 an hour for the legal work, a figure he called conservative.
The board itself declined to provide more specific cost figures. "While CFP Board has and will continue to efficiently manage the litigation, it has every intention to continue to vigorously defend itself," it said in a statement.
Lawyers for Fleming Island, Fla.-based planners Jeffrey and Kimberly Camarda have requested sweeping documentation of the board's disciplinary process, and say they are unable to proceed with depositions and subpoenas while waiting for documentation from the board.
The case stems from the board's effort to publicly sanction the husband-and-wife planners for using the term "fee-only" to market their firm against its rules. At the same time, the board had been allowing hundreds of similar violations by advisors on its own website.
Both sides have asked the court to force the other to reimburse them for legal costs they've incurred due to actions of the other side.
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