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IN THE MATTER OF THE DISCIPLINE OF GWENDOLYN L. LAPRATH AS AN ATTORNEY AT LAW ORIGINAL PROCEEDING [2003 SD 114] ROBERT B. FRIEBERG Beresford, South Dakota Attorney for Disciplinary Board. GWENDOLYN L. LAPRATH Gregory, South Dakota Pro se. Argued August 28, 2003 Opinion Filed 9/17/2003 #22356 GILBERTSON, Chief Justice [¶1.] This is a disciplinary proceeding against Gwendolyn Laprath, [Laprath] a member of the State Bar of South Dakota. The Disciplinary Board of the State Bar of South Dakota has recommended disbarment. The Referee also recommended disbarment. Laprath, who has acted pro se throughout these proceedings, asks that there be no sanction against her and that she be allowed to retain her license to practice law. GENERAL BACKGROUND [¶2.] Laprath is fifty-three years old. She and Tom Laprath were married in 1971 and divorced in 1990. Their son Ben is a police officer in Sioux City, Iowa. Their son Sam is fifteen years old and lives with Laprath. [¶3.] Laprath received a B.S. degree in home economics with an emphasis in child development and psychology from Colorado State University in 1973. Two years later she received an M.A. in elementary education from the University of Northern Colorado. After working for the Cheyenne River Sioux Tribe writing health grants and taking time off to spend with her first child, Laprath began law school at Hamline University in 1980. She completed her second and third years of law school at the University of South Dakota School of Law. She was admitted to practice law in South Dakota on diploma privilege on May 17, 1983. [¶4.] Since then Laprath has been engaged in the practice of law in central South Dakota except for the two year period following her divorce when she lived in Colorado and worked for a law firm there. She currently is a solo practitioner engaged in the general practice of law in Gregory, South Dakota. She currently has twenty open files. Her practice primarily consists of criminal, probate, wills, divorce, family law and business matters. She does not practice in the areas of malpractice, medical injury and bankruptcy and recently quit doing trust work. [¶5.] Laprath is buying the building that serves as her office and home. She has no regularly employed support staff. She does her own document drafting on a computer. However, she does not do her accounting on the computer. Rather, she does it manually. [¶6.] Laprath's office law library consists of outdated sets of SDCL, AmJur2d and federal statutes. She accesses the South Dakota Code and Supreme Court decisions through the Internet. She travels to the law library in Winner to use current sets of the federal statutes, SDCL, AmJur2d, North Western Reporter 2d and their indices. [¶7.] Laprath has one checking account. She uses it for her law office business as well as personal expenses. She has judgments against her stemming from matters relating to her divorce. She has unpaid
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hospital bills from surgeries she required over the past several years. Laprath does not maintain malpractice insurance and has not since 1998. However, she has never been sued for legal malpractice. In compliance with Rule 1.4(c)(2) of the Rules of Professional Conduct, her letterhead does indicate that "This firm is not covered by professional liability insurance." [¶8.] Laprath has been the subject of six previous disciplinary complaints. The first, in 1987, was dismissed. The second, in 1988, resulted in the imposition of a private reprimand. The third in 1990, resulted in an admonition. The fourth, in 1991, resulted in a private reprimand. The fifth, in 1997, resulted in an admonition and the sixth, in 2001, was dismissed. The sanction of a private reprimand is a finding of a serious rule violation resulting in harm to a client, or a serious rule violation that was intentional. An admonition is a finding of a rule violation that does not result in harm to a client greater than de minimus. Additional complaints are pending in this disciplinary proceeding. I. JOHNSON COMPLAINT A. [¶9.] On June 10, 1998 Laprath's former husband, Tom, was disabled in a plane crash. Laprath cared for his personal needs. She also represented him in proceedings before the Social Security Administration. [¶10.] Following a second application Tom was found eligible for social security benefits. Laprath assumed the role of Tom's representative payee. She was charged with the duty of managing his benefits and using them for his best interests. Tom received a lump sum award of $11,304 in December 2000. Although she had no attorney fee agreement with or approval from Tom, nor any order from the Social Security Administration regarding attorney fees, Laprath paid herself twenty-five percent of the lump sum award as attorney fees. The $2,826 check, dated December 11, 2000 was made payable to Laprath, as attorney, and signed by Laprath, as personal payee. [¶11.] On January 21, 2001 Laprath, who still had no written fee agreement with Tom, paid herself $1,590 attorney's fees for guardianship proceedings from Tom's social security funds that she controlled as representative payee. In a letter on January 25, 2001 Laprath billed Tom $2,811.21 for attorney fees for the guardianship and conservatorship as well as her personal services. A memo to Tom, dated January 29, 2001 billed him for $2,385 as "an advancement on attorney fees to draft a Guardianship/conservatorship petition and Motion for Temporary Appointment, with affidavits, notices, and Sam's guardianship to achieve service upon Sam, a minor child[.]" [¶12.] On January 29, 2001 Laprath, as client and representative payee for Tom and Sam Laprath entered into what was denominated as a "Contingent Fee Agreement" with Laprath, attorney at law. In this agreement Laprath, as client, retained Laprath, as attorney, to "file and prosecute a guardianship/conservatorship for Tom J. Laprath and guard/conserve on Sam Laprath, a minor." [¶13.] On January 31, 2001 Laprath filed a petition for the appointment of a guardian and conservator for Tom Laprath a/k/a Tom J. Laprath. In the petition she requested that she and her son, Ben, be appointed as guardians and conservators, as well as temporary guardians and conservators. She presented an ex parte "Order Appointing Temporary Guardian and Conservator" to Circuit Judge Kathleen Trandahl. The order was signed and filed on January 31, 2001. It provided for a hearing on the petition for appointment of guardian and conservator on February 6, 2001. [¶14.] Laprath never discussed her intention to file the petition for guardianship with Tom, nor did she provide him with prior notice. On February 2, 2001 Tom was served with a copy of the petition, the ex parte order and the notice of hearing. Tom promptly retained attorney Rick Johnson to resist the guardianship. Laprath was informed and on February 5, 2001 she wrote to Johnson and told him that she was Tom's payee, temporary guardian and conservator who was owed "more like $20,000 in legal fees given already." Johnson responded by letter on February 8, 2001. It provided, in part: I have had an opportunity to meet with Tom. He doesn't seem to be incompetent at all to me. I'll have to admit that Tom nearly had a heart attack on your last letter where you are claiming legal fees in the amount of $15,000 to $20,000 for helping him.
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Thus the first thing that must be addressed is that since Tom does not agree to that billing it is obvious that you have a very significant conflict of interest in trying to serve as his guardian. Furthermore, serving as his attorney and guardian is a conflict. Tom does not want you to be his guardian or conservator, and he wants you to quit interfering with his ability to get a driver's license. Johnson also suggested: 1. That you immediately resign as his temporary guardian. 2. That you forward to my office copies of any bills that need to be paid as well as any correspondence you have had on his [sic] these bills. 3. That you resign your position as payee of any of Tom's Social Security benefits, including the moneys [sic] previously on deposit and provide a breakdown of all checks that have been written by you since becoming a payee for any of Tom's social security monies or any other funds. 4. That if there are some potential buyers for some of Tom's equipment that you forward the information on that so Tom can consider those sales. 5. That you submit an itemized statement of any costs and attorney fees that you claim to be entitled to since the date you claim to have represented Tom, including the Social Security claim. Please get back to me right away because if you are not willing to resign this temporary conservatorship and guardianship as I will want to have an immediate hearing before the circuit court if that is necessary. On February 13, 2001 Johnson filed and served a motion to set aside the temporary guardianship. [¶15.] Laprath continued her work on the guardianship proceedings. On February 16, 2001 Laprath, as payee, paid herself, as attorney, an additional $1,007 in attorney fees for the guardianship matter. She paid herself from Tom's money and took the money without notice to or approval of Tom or his new attorney. A document dated February 18, 2001, signed by Laprath and filed in the guardianship matter provided: FORGIVENESS OF DEBT: Comes now, Gwendolyn Laprath, the Good Samaritan/and One of the Petitioners herein who has given legal advice and general care to Tom J. Laprath on or before January 1, 2001 in the amount of approximately $15,000 to $20,000, no bill has been written for these services, and will not be written: That Gwendolyn Laprath does hereby forgive all outstanding debts for attorney fees incurred by Tom J. Laprath prior to January 1, 2001. Gwendolyn Laprath does not forgive those attorney fees, costs, and caretaker/guardian fees incurred from and after January 2, 2001. [¶16.] The motion to set aside the temporary guardianship was heard and granted by Circuit Judge Steven L. Zinter on February 23, 2001. Judge Zinter heard Tom's motion to dismiss the petition for guardianship and Laprath's motion for approval of attorney fees "in the amount of $3,000.00 upon the approximately $9,000.00 expended to date" on May 24, 2001. In granting the motion to dismiss, Judge Zinter found: 1. That the proceedings to secure a guardianship/conservatorship over the alleged person in need of protection, Thomas J. Laprath, were done ex parte.

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2. 3. 4.

That the guardianship/conservatorship proceedings have now been dismissed in their entirety by the Court. That attorney Gwen Laprath was representing herself as well as others in the pursuit of said guardianship/conservatorship proceedings. That Thomas J. Laprath did not want any guardianship or conservatorship over him and the same was done contrary to his wishes. That neither this court nor any other circuit court has ever appointed the petitioner or any other person to be the guardian or conservator for Thomas J. Laprath. That the services that are the subject matter of the petitioner's present claim for attorney fee compensation were not shown to be for the benefit of Thomas J. Laprath and on their face show that some of the services being billed for were either not necessary or unreasonably incurred.

5.

6.

Judge Zinter concluded: 1. The court has jurisdiction over this petition. 2. 3. That the petitioner Gwen Laprath has not shown legal cause as to why she should receive the fees requested in her petition herein. The court does not consider that it has before it the issue of the repayment of any fees previously collected by Gwen Laprath. B. [¶17.] In response to Johnson's legal representation of Tom, Laprath authored a series of letters to Johnson as well as an answer to the motion to dismiss the guardianship. She copied the letters and answer to a number of individuals who had nothing to do with the guardianship proceedings. [¶18.] In a February 5, 2001 letter to a relative of Tom who was going to testify to Tom's total competency, Laprath chastised the relative for encouraging Tom to retain an attorney "that costs $500 per hour." In a February 9, 2001 letter to Johnson she wrote "you of course, will be the greedy attorney using this poor family member for his last dime at $500/hr." And, in her answer to the motion to dismiss, Laprath asserted "[f]urther that Rick Johnson has without benefit of court order required Tom J. Laprath to pay him at least the sum of $5,000 to date in attorney fees." Johnson did not charge $500 per hour. He had not received any fees, retainer or compensation from Tom. [¶19.] Laprath also authored a March 19, 2001 letter where she told Johnson to be on his "best behavior" when he deposed her or she "will walk." She offered a compromise. If Ben, Tom and Laprath's son, would agree to be Tom's sole guardian and she served as his secretary to draw and transmit checks, she wanted Johnson to "resign as Tom's attorney for 1 yr. and stop this 'targeting the messenger' because you don't have a case." She concluded by writing, "your behavior has been reprehensible in all of this and you don't need the work for George [Johnson's son who is a lawyer]. I hope you will teach George better morals than you have exhibited. A good moral attorney would have advised Tom to work with his family and get his act together as he will not improve but will continue to decline." C.
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[¶20.] After reviewing Rule 8.3(a), (Reporting of Professional Conduct), and Rule 8.4, (Misconduct), of the South Dakota Rules of Professional Conduct, Johnson filed a formal complaint against Laprath with the Disciplinary Board. The complaint concerned Laprath's conduct in the guardianship proceedings as well as her mischaracterizations in her letters and answer. Johnson believed that Laprath had potentially violated SDCL 16-18-14, 16-18-16, 16-18-19 and 16-18-20 as well as Rules 1.5(a)-(b) and 8.4 of the Rules of Professional Conduct. Johnson wrote, "I believe this matter deserves the disciplinary board's consideration in order to potentially protect the public from unethical or incompetent legal services, and as a means of reinforcing that Ms. Laprath must respect and uphold the image and integrity of the attorneys she practices with as a whole." II. WIEST COMPLAINT [¶21.] The Department of Revenue periodically reviews its files to determine those license holders who have not filed or paid their sales, use or contractors' excise tax. The Department's summary of a license holder is reviewed by an attorney to determine whether there is a prima facia criminal case. If there is, the Department sends the license holder a letter giving the holder five days to return delinquent returns and/or payment. If the license holder complies, no complaint is issued at that time. [¶22.] It is the practice of the Attorney General's office to forward to the State Bar of South Dakota a copy of the "five-day letter" sent to any lawyer licensed to practice law in South Dakota. It makes no difference if the attorney has come into compliance or not. [¶23.] On September 28, 2001 Assistant Attorney General David D. Wiest sent a five-day letter to Laprath who had failed to file sales tax returns and timely pay the tax due for the months of May, June, July and August 2001. Laprath admits that she failed to file the sales tax returns and pay the tax owed. She, however, did not have enough money to timely pay the tax. Ultimately the tax was paid. [¶24.] In addition, Laprath failed to timely file sales tax returns for January, February, May, July and November 2002. As of January 9, 2003 she owed $20.94 in unpaid sales tax. III. LEIGHTON ESTATES [¶25.] On September 14, 2001 Laprath entered into a written fee agreement with Merle J. Leighton for the probate of two "estates in Todd County, and the BIA Trust Assets." The fee agreement, on a form titled "Contingent Fee Agreement," provided that Laprath would receive "$4,240.00 as an advance against anticipated expenses and attorney fees." The agreement did not state the basic fee. It did, however, give Laprath an additional eight percent fee "[i]f the real estate is sold." [¶26.] To pay her fee Laprath made arrangements for Leighton to borrow $5,500 from BankWest in Gregory, South Dakota. She accompanied Leighton to the bank and co-signed the note. To secure the note Leighton mortgaged estate property. On October 12, 2001 Laprath asserted an attorney's lien against the two estates and assigned her lien to BankWest. [¶27.] On October 12, 2001 Laprath received the sum of $4,240 as her retainer. She did not put it in a trust account. Rather she used it to pay her delinquent sales tax and penalty and her personal needs. At the time she spent the retainer, she had not earned the money, nor did she release her attorney's lien. IV. KAUPP GUARDIANSHIP [¶28.] In March 1995 Oswald J. Kaupp retained Laprath with regard to an "arrest warrant and the writing of a 'Kaupp Trust.'" At the time she was retained Laprath advised Kaupp that he needed a guardian. Family members, however, felt a trust was more appropriate. [¶29.] Despite her misgivings about Kaupp's mental capacity, Laprath drafted trust documents which Kaupp signed. Legal disagreements arose between Kaupp and Laprath and he refused to sign some documents she presented to him. As a result she filed a petition requesting that she be appointed his guardian on July 25, 1995. The petition alleged that Kaupp was incompetent and asked that her

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appointment be for a "limited time during which the legal matters will be settled and the ranching operations streamlined." Laprath requested attorney fees although she had already accepted a $3,100 retainer from Kaupp. [¶30.] On August 10, 1995 Kaupp discharged Laprath as his attorney. On September 6, 1995 Kaupp, represented by his court appointed attorney John Simpson, filed a motion to dismiss Laprath's petition for guardianship. He asked that the petition be dismissed "for the reason that he has discharged attorney Laprath, that prior to her discharge she took positions that were adverse to his interests and contrary to his wishes and she therefore lacked any standing as an interested party under the statute to invoke the jurisdiction of the court in these proceedings." [¶31.] Laprath resisted the motion to dismiss. Following a hearing, the trial court, Judge Trandahl, entered findings of fact, conclusions of law, and an order of dismissal. The court found in part: 4. That Attorney Laprath had disagreements with O.J. Kaupp which reflected that she had interests that were adverse to his and for that reason and because she had been terminated as his attorney she had no standing as an interested party to institute these proceedings. 5. If a conservator is appointed herein it may become his or her duty to investigate the legal work that had been done by attorney Laprath, and for that reason she cannot act as petitioner, guardian or conservator. 6. That the court finds that attorney Lapraths request for court approved attorney fees are without merit. It concluded: 1. The court concludes that Attorney Laprath is not an interested party within the meaning of SDCL 29A-5-305. 2. The court concludes that Attorney Laprath is not entitled to attorney fees. 3. The court concludes that Attorney Laprath lacks standing and has a conflict of interest and her petition should be dismissed. V. TRUST ACCOUNTING [¶32.] Laprath uses a single checking account for her personal and professional transactions. Prior to April 2001, she never maintained a trust account for the handling of client's funds. In April 2001 she did designate a savings account that she had at BankWest in Gregory, South Dakota as a trust account. Laprath uses this trust account for several purposes and commingles her own funds in the account. She makes cash withdrawals from the trust account and either purchases bank money orders or deposits the proceeds in her professional/personal checking account. [¶33.] Laprath does not maintain the records required by SDCL 16-18-20.1 which provides: Every attorney shall maintain complete records of the handling, maintenance

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and disposition of all funds, securities and other properties of a client at any time in his possession, from the time of receipt to the time of final distribution, and shall preserve such records for a period of five years after final distribution of such funds, securities or other properties or any portion thereof, and failure to keep such records shall be grounds for appropriate disciplinary proceedings. [¶34.] SDCL 16-18-20.2 requires the maintenance of seven minimum trust accounting records: (1) A separate bank account or accounts and, if utilized, a separate savings and loan association account or accounts. Such accounts shall be located in South Dakota unless the client otherwise directs in writing. The account or accounts shall be in the name of the lawyer or law firm and clearly labeled and designed as a "trust account." (2) Original or duplicate deposit slips and, in the case of currency or coin, an additional cash receipts book, clearly identifying: (a) (b) (3) The date and source of all trust funds received; and The client or matter for which the funds were received.

Original cancelled checks, or copies of both sides of the original checks produced through truncation or check imaging, or the equivalent, all of which must be numbered consecutively. Other documentary support for all disbursements and transfers from the trust account. A separate trust accounts receipts and disbursements journal, including columns for receipts, disbursements, transfers, and the account balance, and containing at least:

(4) (5)

(a) The identification of the client or matter for which the funds were received, disbursed, or transferred; (b) The date on which all trust funds were received, disbursed, or transferred; (c) The check number for all disbursements; and (d) The reason, such as "settlement," "closing,"or "retainer," for which all trust funds were received, disbursed, or transferred. (6) A separate file, ledger, or computer file with an individual card, page, or computer document for each client or matter, showing all individual receipts, disbursements, or transfers and any unexpended balance, and containing; (a) The identification of the client or matter for which trust funds were received, disbursed, or transferred; (b) The date on which all trust funds were received, disbursed, or transferred; (c) The check number of all disbursements; and (d) The reason, such as "settlement," "closing,"or "retainer," for which all trust funds were received, disbursed, or transferred. (7) All bank or savings and loan association statements for all trust

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accounts. Laprath fails to maintain any of these minimum accounting records. [¶35.] SDCL 16-18-20.2 also requires minimum trust accounting procedures: (1) The lawyer shall cause to be made monthly: (a) Reconciliations of all trust bank or savings and loan association accounts, disclosing the balance per bank, deposits in transit, outstanding checks identified by date and check number, and any other items necessary to reconcile the balance per bank with the balance per the checkbook and the cash receipts and disbursements journal; and A comparison between the total of the reconciled balances of all trust accounts and the total of the trust ledger cards, pages, or computer documents, together with specific descriptions of any difference between the two totals and reasons therefor.

(b)

(2) (3) (4)

At least annually, a detailed listing identifying the balance of the unexpended trust money held for each client or matter. The above reconciliations, comparisons, and listing shall be retained for at least six years. The lawyer shall file with the State Bar of South Dakota a trust accounting certificate showing compliance with these rules annually, which certificate shall be filed annually between December first and January thirty-first on a form approved by the Disciplinary Board.

Laprath failed to follow these minimum accounting procedures. She did, however, file with the State Bar certificates showing compliance with the trust accounting rules in 1993, 1994, 1995, 1996, 1997, 1998, 1999, 2000, and 2001. The certificates were false and Laprath knew they were false. VI. COMPETENCY [¶36.] In proceedings before the Referee, Circuit Court Judge Jack R. Von Wald, the Disciplinary Board subpoenaed a sitting justice of the South Dakota Supreme Court[1] and three sitting circuit court judges to testify. All had significant prior contact with Laprath in the capacity of a circuit judge. Each was asked if he or she had formed an opinion as to Laprath's competency to practice law. Judge Max A. Gors stated, "I do not believe she is competent." According to Justice Zinter, "Ms. Laprath does not meet the standards of competence of lawyers practicing in South Dakota." Judge Lori S. Wilbur testified, "My opinion is that Ms. Laprath is not competent, as I understand the Rules of Professional Conduct, to practice law; and it is a chronic problem." Judge Kathleen Trandahl testified, "[i]t is my legal opinion based upon a review of the files, having worked with Ms. Laprath over the years, that she is not competent to practice law. . . . She does not possess the ability to do that." [¶37.] Each judge cited specific instances when Laprath's competency came into question. Records of these cases are included in the record of the proceedings before this Court and have been reviewed. They support the judges

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