Title: Office of Lawyer Regulation v. Phaidra S. Knight

State: wisconsin

Issuer: Wisconsin Supreme Court

Document:

2008 WI 13 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2006AP2461-D 
COMPLETE TITLE: 
 
 
In the Matter of Disciplinary Proceedings 
Against Phaidra S. Knight, Attorney at Law: 
 
 
Office of Lawyer Regulation, 
          Complainant, 
     v. 
Phaidra S. Knight, 
          Respondent. 
 
 
 
 
 
 
DISCIPLINARY PROCEEDINGS AGAINST KNIGHT 
 
 
OPINION FILED: 
February 26, 2008   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
        
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
        
 
COUNTY: 
        
 
JUDGE: 
        
 
 
 
JUSTICES: 
 
 
CONCURRED: 
        
 
DISSENTED: 
        
 
NOT PARTICIPATING:         
 
 
 
ATTORNEYS: 
 
      
 
 
 
 
2008 WI 13
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.  2006AP2461-D  
 
 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
In the Matter of Disciplinary Proceedings 
Against Phaidra S. Knight, Attorney at Law: 
 
Office of Lawyer Regulation, 
 
          Complainant, 
 
     v. 
 
Phaidra S. Knight, 
 
          Respondent. 
 
FILED 
 
FEB 26, 2008 
 
David R. Schanker 
Clerk of Supreme Court 
 
 
 
 
 
ATTORNEY 
disciplinary 
proceeding.  Attorney's 
license 
suspended.   
 
¶1 
PER CURIAM.   We review the referee's1 report and 
recommendation that the license of Attorney Phaidra S. Knight to 
practice law in Wisconsin be suspended for a period of 90 days, 
and that Attorney Knight be required to pay the costs of this 
disciplinary proceeding, which were $1,524.29 as of August 22, 
2007.  After independently reviewing the matter, we agree with 
                                                 
1 Attorney Kathleen Callan Brady was appointed to serve as 
the referee in this matter. 
No. 
2006AP2461-D   
 
2 
 
and adopt the referee's findings of fact and conclusions of law, 
which were made after entering a default judgment against 
Attorney 
Knight. 
 
We 
determine 
that 
Attorney 
Knight's 
professional misconduct requires that her license to practice 
law in Wisconsin be suspended for a period of four months.  In 
addition, we conclude that the reinstatement of Attorney 
Knight's license should be conditioned upon providing proof that 
she paid the appropriate funds to clients G.F. and E.C.  
Finally, we decide that Attorney Knight should pay the costs of 
this disciplinary proceeding. 
¶2 
Attorney Knight was admitted to the practice of law in 
Wisconsin in August 1999.  She has not been the subject of prior 
discipline, but her license to practice law in this state was 
administratively suspended in June 2006 due to her failure to 
comply with the mandatory reporting requirements for continuing 
legal education.  Her license remains suspended as of the date 
of this opinion. 
¶3 
On October 9, 2006, the Office of Lawyer Regulation 
(OLR) filed a complaint against Attorney Knight alleging seven 
separate counts of professional misconduct arising out of 
Attorney 
Knight's 
solicitations 
and 
representations 
of 
individuals that might have claims to funds that had escheated 
to the state and were being held by the Wisconsin State 
Treasurer.  The OLR made multiple attempts to serve Attorney 
Knight personally with authenticated copies of the complaint and 
order 
to 
answer, 
but 
the 
attempts 
were 
unsuccessful.  
Ultimately, the OLR served Attorney Knight pursuant to SCR 
No. 
2006AP2461-D   
 
3 
 
22.13(1) by sending an authenticated copy of the complaint and 
order to answer to Attorney Knight at the most recent address 
she had furnished to the State Bar of Wisconsin. 
¶4 
After Attorney Knight failed to file an answer to the 
complaint, an OLR representative was able to contact her by 
telephone, at which time Attorney Knight provided a new current 
mailing address.  The OLR then filed and served a notice of 
motion and motion for default.  At the time and place set forth 
in the notice of motion, the OLR appeared but Attorney Knight 
did not appear.  The referee adjourned the default hearing for a 
short time and instructed the OLR counsel to attempt one more 
time to contact Attorney Knight.  Although the OLR counsel left 
a voice-mail message instructing Attorney Knight to contact the 
OLR immediately, Attorney Knight did not respond.  When the 
hearing reconvened, the referee granted the OLR's motion for 
default. 
¶5 
By 
virtue 
of 
Attorney 
Knight's 
default, 
the 
allegations contained in the OLR's complaint were deemed 
admitted.  The referee subsequently filed a report that 
contained factual findings in accord with the allegations of the 
complaint.  The referee also concluded that those factual 
findings proved that Attorney Knight had committed the seven 
counts of professional misconduct alleged by the OLR.  
¶6 
Because no appeal has been filed from the referee's 
report, we proceed with our review of the matter pursuant to SCR 
No. 
2006AP2461-D   
 
4 
 
22.17(2).2  In conducting our review, we uphold a referee's 
findings of fact unless they are shown to be clearly erroneous.  
See In re Disciplinary Proceedings Against Sosnay, 209 Wis. 2d 
241, 243, 562 N.W.2d 137 (1997).  We review the referee's 
conclusions of law, however, on a de novo basis.  See In re 
Disciplinary Proceedings Against Carroll, 2001 WI 130, ¶29, 248 
Wis. 2d 662, 636 N.W.2d 718.  Pursuant to our obligation to 
supervise and regulate the practice of law in this state, we 
determine the appropriate level of discipline independently, 
regardless 
of 
the 
referee's 
recommendation. 
 
See 
In 
re 
Disciplinary Proceedings Against Widule, 2003 WI 34, ¶44, 261 
Wis. 2d 45, 660 N.W.2d 686.  
¶7 
The factual findings in this case state that while 
Attorney Knight was working in the office of former Wisconsin 
State Senator Gary George, she met an individual by the name of 
Calvin Eleby, Jr. (Eleby).  Eleby operated a governmental 
affairs consulting business in Michigan.  He was also an 
attorney, but was licensed to practice only in the state of New 
York.  One of Eleby's business interests was to attempt to 
locate missing heirs and represent them as an attorney in 
                                                 
2 SCR 22.17(2) provides:  Review: appeal. 
 
(2) If no appeal is filed timely, the supreme 
court shall review the referee's report; adopt, reject 
or modify the referee's findings and conclusions or 
remand the matter to the referee for additional 
findings; 
and 
determine 
and 
impose 
appropriate 
discipline.  The court, on its own motion, may order 
the parties to file briefs in the matter. 
No. 
2006AP2461-D   
 
5 
 
probate court proceedings to retrieve funds that had escheated 
to the State of Wisconsin and were being held by the Office of 
the Wisconsin State Treasurer. 
¶8 
Attorney Knight knew that Eleby did not hold a license 
to practice law in Wisconsin.  Nonetheless, on multiple 
occasions she gave Eleby permission to file Wisconsin probate 
court pleadings under her name and State Bar of Wisconsin 
attorney number as part of his process of claiming escheated 
funds in Wisconsin.   
¶9 
For example, in March 2000 Eleby used Attorney 
Knight's name and attorney number to file a petition in the Polk 
County circuit court for the release of escheated funds to 
Eleby's client, M.E.  The court granted the petition and ordered 
the state to release $30,695.33 to M.E.  Eleby convinced the 
treasurer's office to issue the check in the name of his trust 
account.  In addition to receiving the agreed-upon attorney fee, 
Eleby improperly misappropriated an additional $10,236.90 for 
his own purposes, falsely telling M.E.'s family that he was 
required to pay those funds to the other side of the decedent's 
family.  Eleby was later charged criminally for this theft and 
admitted his wrongdoing.  Although Attorney Knight had allowed 
Eleby to use her name and attorney number on the probate 
petition, which ultimately led to the conversion of funds, 
Attorney Knight had no contact with M.E. and received no part of 
the attorney fee arising out of Eleby's representation of M.E. 
¶10 In October 2001 Eleby signed Attorney Knight's name to 
a petition he filed in the Barron County circuit court on behalf 
No. 
2006AP2461-D   
 
6 
 
of client J.W. seeking the release of escheated funds.  Although 
Attorney Knight never practiced law in Michigan or shared an 
office with Eleby, in November 2001 Eleby sent a letter to the 
court under letterhead for the purported law firm of "Eleby and 
Knight" in Birmingham, Michigan.  The court ultimately granted 
the petition and ordered the state treasurer to release 
$44,124.59 to J.W.  On the same date as the court's order, the 
treasurer's office received a letter again written on "Eleby and 
Knight" letterhead and purportedly bearing Attorney Knight's 
signature.  The letter authorized Eleby to pick up on behalf of 
J.W. a check for the released funds that was to be made payable 
to Attorney Knight's trust account.  Eleby subsequently picked 
up the check and endorsed it as "Phaidra Knight by Calvin 
Eleby."   
¶11 In February 2002 Eleby was hired by J.M. to recover 
escheated funds.  Eleby filed a petition to that effect in the 
Milwaukee County circuit court, again signing Attorney Knight's 
name and using her attorney number.  When the court scheduled a 
hearing on the petition, both Attorney Knight and Eleby appeared 
on behalf of J.M.  Because the court was concerned about the 
sufficiency of the documentation to support J.M.'s claim to the 
escheated funds, it scheduled another hearing and required J.M. 
to appear personally.  Prior to the second hearing, Eleby sent a 
letter to the court under Attorney Knight's name that provided 
additional documentation to support J.M.'s claim.  At the second 
hearing, J.M. personally appeared along with Eleby and Attorney 
Knight.  This was the only contact that J.M. ever had with 
No. 
2006AP2461-D   
 
7 
 
Attorney Knight.  After the court granted the petition, the 
treasurer's office issued a check in the amount of $41,514.95 
made payable to "Phaidre [sic] Knight Atty. Trust FBO3 [J.M.]."   
¶12 Attorney Knight authorized Eleby to pick up the check 
and to send the appropriate funds to J.M.  Eleby endorsed the 
check on behalf of Attorney Knight and paid her a few hundred 
dollars for her time and gas expenses.  Eleby did not pay any of 
the funds to J.M., but instead misappropriated all of the 
remaining funds for his own benefit.  When the OLR later 
questioned Attorney Knight about whether she had taken any 
actions to ensure that J.M. had received his funds, she 
indicated that she had asked Eleby about the matter only a 
couple of times shortly after he had endorsed the state 
treasurer's check.  Attorney Knight stated that Eleby had told 
her on the second occasion that he had delivered a check to his 
client.  Because Attorney Knight had no contact information for 
J.M., she could not directly inquire of J.M. whether he had 
received his funds.  Attorney Knight simply assumed that Eleby 
had distributed them properly.   
¶13 In July 2002 Eleby again signed Attorney Knight's name 
to a petition in the Racine County circuit court seeking to 
claim escheated funds from the estate of E.S.  Eleby mailed 
these documents to the circuit court under cover of a letter 
that bore the heading "Phaidra S. Knight, Eleby Governmental 
Affairs."  As noted above, Attorney Knight and Eleby never 
                                                 
3 This is an abbreviation of the term "for the benefit of." 
No. 
2006AP2461-D   
 
8 
 
practiced together in the same law firm or even shared office 
space.  In a subsequent letter, Eleby informed the court that he 
was working "on behalf of Attorney Phadria [sic] S. Knight."  In 
August 2002 Eleby signed Attorney Knight's name to a motion 
requesting the court to allow Eleby to appear pro hac vice in 
the estate of E.S. matter.  The court granted the motion and 
subsequently granted the petition, authorizing the release of 
$43,068.97 to the heirs of E.S. that Eleby was representing.  
Shortly thereafter, Attorney Knight sent an e-mail message to 
the treasurer's office stating that because she would be 
unavailable for the next three weeks, the treasurer's office 
should send the check to her in care of Eleby at Eleby 
Governmental Affairs.  The treasurer's office complied, sending 
to Eleby the check for $43,068.97 made payable to "Phaidra 
Knight Trust FBO Heir c/o Calvin Eleby."  Although Eleby 
properly distributed some of the funds, he illegally converted 
$10,165.56 for his own use.   
¶14 In March 2003 J.A. and P.G. retained Eleby to recover 
certain escheated funds from a Wood County estate.  Eleby again 
signed Attorney Knight's name to the petition and to subsequent 
pleadings.  J.A. and P.G. were unaware of Attorney Knight, 
having never heard of her or met her.  They believed that Eleby 
alone was representing them.  After the state initially opposed 
the petition, Attorney Knight and Eleby both appeared on behalf 
of J.A. and P.G. in two teleconferences with the circuit court.  
Ultimately, the court granted the petition and ordered the state 
treasurer to disburse $16,500 to Attorney Knight for the benefit 
No. 
2006AP2461-D   
 
9 
 
of J.A. and P.G.  On June 16, 2003, the treasurer's office 
issued the check in that amount made payable to "Phaidra Knight 
Atty. Trust Acct. FBO [P.G.] & [J.A.]."  Eleby cashed the check, 
but failed to forward any funds to either J.A. or P.G. 
¶15 J.A. 
and 
a 
representative 
of 
P.G. 
subsequently 
contacted Eleby several times about receiving the funds that 
belonged to them.  The representative of P.G. told Eleby that 
she would soon report to the state authorities Eleby's failure 
to distribute the funds.  On August 30, 2003, Eleby sent a check 
for $3,250 to P.G.  He deducted from this check his total fees, 
including those fees that were the responsibility of J.A.  Eleby 
never sent any payment to J.A.  
¶16 In addition to cases in which Attorney Knight allowed 
Eleby to use her name and attorney number to practice law in 
Wisconsin, Attorney Knight also handled some escheated funds 
cases on her own.  In June 2000 she mailed form solicitation 
letters 
and 
proposed 
fee 
agreements 
to 
individuals 
that 
potentially could have been heirs to escheated funds.  Her form 
letter contained the following language: 
I have located your unclaimed share of the escheated 
estate of [decedent] in the amount of $[xxx].  In 
accordance with the Chapter 863 of the Wisconsin 
statutes, you are entitled to petition for your 
unclaimed portion.  Be aware, however, that there is a 
statute of limitations for a petition to be submitted.  
If you do not file a timely petition, you will waive 
your rights to make a claim. 
¶17 Attorney Knight sent these letters to individuals 
without being sure that she was in fact contacting the person 
No. 
2006AP2461-D   
 
10 
 
with a legitimate claim to the escheated money and without 
asking for confirmation of the recipient's identity.  In 
addition, she sent some of these form letters to more than one 
individual with the same name.  Further, her letter did not 
contain any qualification as to whether the recipient was in 
fact entitled to claim the escheated funds.  None of the form 
letters Attorney Knight sent were labeled as an advertisement, 
and Attorney Knight did not file a copy of those letters with 
the OLR.   
¶18 Attorney Knight opened a client trust account in June 
2000, but maintained it for less than two months.  She did not 
deposit any funds into the account or withdraw any funds from 
the account while it was open.  Instead of using a trust 
account, on some occasions when she received a check on behalf 
of a client in an escheated funds matter, she would cash the 
check from the state treasurer and obtain a cashier's check or 
money order for the amount she calculated was owed to the client 
under her retainer agreement.  She would send the cashier's 
check or money order to the client and would retain the 
remaining amount of the original check as payment for her 
attorney fee and expenses.  
¶19 One case in which Attorney Knight pursued escheated 
funds by herself was her representation of G.F.  Attorney Knight 
filed a petition to recover escheated funds on behalf of G.F. in 
June 2000.  Within a few weeks the petition was granted and the 
state treasurer issued a check in the amount of $5,708.19 to 
"Knight, Phaidra Trust FBO [G.F.]."  In the course of its later 
No. 
2006AP2461-D   
 
11 
 
investigation, the OLR repeatedly requested proof that Attorney 
Knight had disbursed the proper amount of funds to G.F.  
Although 
Attorney 
Knight 
promised 
to 
provide 
a 
receipt 
confirming G.F.'s receipt of the funds, she never produced any 
such receipt.  
¶20 Similarly, in November 2000 Attorney Knight received a 
check on behalf of client E.C. for $10,945.07 due to a 
successful claim for recovery of escheated funds.  The check was 
made payable to "Trust Acct Atty. Phaidre [sic] Knight FBO 
[E.C.]."  As was the case with G.F., the OLR later requested 
proof that E.C. had received her proper share of these funds.  
Although Attorney Knight again claimed that she had a receipt 
confirming payment to E.C. and promised to send it to the OLR 
"right away," she never produced any such receipt.  
¶21 The various situations involving Eleby's pattern of 
illegal conduct began to come to light in the summer and fall of 
2003.  In July 2003 J.M. consulted an attorney, who contacted 
Eleby about the funds due to J.M.  Eleby replied that he could 
not disburse the funds to J.M. at that time because they were in 
Attorney Knight's account and she was out of the country for 
several weeks.  In September the attorney contacted Attorney 
Knight directly and raised the possibility of contacting the 
police and lawyer regulation authorities.  Attorney Knight then 
spoke with Eleby, who admitted that he had spent J.M.'s money.  
Attorney Knight informed J.M.'s current attorney of Eleby's 
confession.  That attorney contacted the Milwaukee County 
district attorney's office and the OLR to inform them that Eleby 
No. 
2006AP2461-D   
 
12 
 
and Attorney Knight had stolen approximately $30,000 that 
rightfully belonged to J.M.   
¶22 The district attorney's office investigated the matter 
and ultimately obtained an admission from Eleby that he had 
converted funds in four cases.  In two of the matters, which 
formed the basis of criminal charges against Eleby, the funds 
that Eleby stole came from checks that had been made payable to 
Attorney Knight's trust account.  Also, Attorney Knight had 
personally appeared at hearings in two of the cases with Eleby.  
In another matter, Attorney Knight had personally sent an e-mail 
to the state treasurer's office to request that the check be 
sent to her at Eleby's address.  Eleby ultimately pled guilty to 
two felony counts of theft in a business setting.  Although 
Attorney Knight was interviewed as part of the criminal 
investigation, she was not charged with any criminal offenses. 
¶23 On the basis of these factual findings, the referee 
concluded that the OLR had properly proven each of the seven 
counts 
of 
professional 
misconduct 
alleged 
in 
the 
OLR's 
complaint.  First, by agreeing to allow Eleby, who was not 
licensed to practice law in Wisconsin, to use her name and 
attorney number to represent clients in Wisconsin courts, 
Attorney Knight assisted an unlicensed person in conduct that 
constitutes the unauthorized practice of law in this state, in 
No. 
2006AP2461-D   
 
13 
 
violation of former SCR 20:5.5(b).4  Attorney Knight also 
knowingly made a false statement of fact to a tribunal in 
violation of SCR 20:3.3(a)(1)5 and SCR 20:8.4(a)6 when she 
allowed Eleby to sign her name to correspondence and pleadings 
that she had never seen, thereby misrepresenting to the court 
that 
a 
Wisconsin-licensed 
attorney 
was 
involved 
in 
the 
representation. 
 ¶24 Third, by failing to deposit checks she received from 
the state treasurer's office for the benefit of her own personal 
clients into one or more identifiable client trust accounts, 
Attorney Knight violated SCR 20:1.15(a).7  Attorney Knight also 
                                                 
4 Effective July 1, 2007, substantial changes were made to 
the Wisconsin Supreme Court Rules of Professional Conduct for 
Attorneys, SCR Chapter 20.  See S.Ct. Order No. 04-07, 2007 WI 
4, 293 Wis. 2d xv; and S.Ct. Order No. 06-04, 2007 WI 48, 297 
Wis. 2d xlvii.  Since the conduct underlying this case arose 
prior to July 1, 2007, all references to the supreme court rules 
will be to those in effect prior to July 1, 2007. 
Former SCR 20:5.5(b) states that a lawyer shall not "assist 
a person who is not a member of the bar in the performance of 
activity that constitutes the unauthorized practice of law." 
5 Former SCR 20:3.3(a)(1) provides that a lawyer shall not 
knowingly "make a false statement of fact or law to a tribunal." 
6 Former SCR 20:8.4(a) states that it is professional 
misconduct for a lawyer to "violate or attempt to violate the 
Rules of Professional Conduct, knowingly assist or induce 
another to do so, or do so through the acts of another." 
7 Former SCR 20:1.15(a) (effective through June 30, 2004) 
provided:  
 
A lawyer shall hold in trust, separate from the 
lawyer's own property, that property of clients and 
third persons that is in the lawyer's possession in 
connection with a representation or when acting in a 
No. 
2006AP2461-D   
 
14 
 
violated former SCR 20:1.15(e)8 by failing to prepare complete 
records of trust account funds or other trust property, 
                                                                                                                                                             
fiduciary capacity.  Funds held in connection with a 
representation or in a fiduciary capacity include 
funds held as trustee, agent, guardian, personal 
representative of an estate, or otherwise.  All funds 
of clients and third persons paid to a lawyer or law 
firm shall be deposited in one or more identifiable 
trust accounts as provided in paragraph (c).  The 
trust account shall be maintained in a bank, savings 
bank, trust company, credit union, savings and loan 
association or other investment institution authorized 
to do business and located in Wisconsin.  The trust 
account shall be clearly designated as "Client's 
Account" or "Trust Account" or words of similar 
import.  No funds belonging to the lawyer or law firm, 
except funds reasonably sufficient to pay or avoid 
imposition 
of 
account 
service 
charges, 
may 
be 
deposited in such an account.  Unless the client 
otherwise directs in writing, securities in bearer 
form shall be kept by the attorney in a safe deposit 
box in a bank, savings bank, trust company, credit 
union, 
savings 
and 
loan 
association 
or 
other 
investment institution authorized to do business and 
located in Wisconsin.  The safe deposit box shall be 
clearly designated as "Client's Account" or "Trust 
Account" or words of similar import.  Other property 
of a client or third person shall be identified as 
such and appropriately safeguarded.  If a lawyer also 
licensed in another state is entrusted with funds or 
property 
in 
connection 
with 
an 
out-of-state 
representation, this provision shall not supersede the 
trust account rules of the other state. 
8 The OLR's complaint and the referee's report mistakenly 
list the appropriate rule in this violation as "SCR 20:1.15(3)," 
which does not exist.  It is clear from the description of the 
violation in the complaint and report, however, that the OLR and 
the referee intended to refer to former SCR 20:1.15(e), in 
effect prior to July 1, 2004.  That provision stated as follows: 
 
(e) Complete records of trust account funds and 
other trust property shall be kept by the lawyer and 
shall be preserved for a period of at least six years 
after termination of the representation.  Complete 
No. 
2006AP2461-D   
 
15 
 
including records documenting the disposition of client funds, 
and to preserve such records for at least six years after 
termination of the representation. 
¶25 Counts five and six relate to the solicitation letters 
that Attorney Knight sent to potential clients in escheated 
funds matters.  The referee concluded that by failing to 
conspicuously label such letters with the word "Advertisement," 
and by failing to file a copy of those letters with the OLR 
within five days of their dissemination, Attorney Knight had 
violated 
SCR 
20:7.3(b).9  In addition, Attorney Knight's 
                                                                                                                                                             
records shall include: (i) a cash receipts journal, 
listing the sources and date of each receipt, (ii) a 
disbursements journal, listing the date and payee of 
each disbursement, with all disbursements being paid 
by check, (iii) a subsidiary ledger containing a 
separate page for each person or company for whom 
funds have been received in trust, showing the date 
and amount of each receipt, the date and amount of 
each disbursement, and any unexpended balance, (iv) a 
monthly schedule of the subsidiary ledger, indicating 
the balance of each client's account at the end of 
each month, (v) a determination of the cash balance 
(checkbook balance) at the end of each month, taken 
from the cash receipts and cash disbursements journals 
and a reconciliation of the cash balance (checkbook 
balance) with the balance indicated in the bank 
statement, and (vi) monthly statements, including 
canceled 
checks, 
vouchers 
or 
share 
drafts, 
and 
duplicate deposit slips.  A record of all property 
other than cash which is held in trust for clients or 
third persons, as required by paragraph (a) hereof, 
shall also be maintained. All trust account records 
shall be deemed to have public aspects as related to 
the lawyer's fitness to practice. 
9 Former SCR 20:7.3(b) states: "A written communication 
under par. (a) shall be conspicuously labeled with the word 
'Advertisement' and a copy of it shall be filed with the office 
of lawyer regulation within 5 days of its dissemination." 
No. 
2006AP2461-D   
 
16 
 
solicitation letters stated without qualification that she had 
located the addressee's unclaimed share of escheated funds when 
in fact she did not know if she was contacting the correct 
person.  In so doing, the referee concluded that Attorney Knight 
had made false and misleading statements to potential clients by 
omitting a fact necessary to make the statement considered as a 
whole not materially misleading and by creating a false 
expectation about the results she could achieve, in violation of 
SCR 20:7.1(a).10 
¶26 Finally, because Attorney Knight had failed to provide 
the OLR with documents evidencing payments to certain of her 
clients after she had asserted that she had located such 
documents 
and 
had 
promised to provide them to the OLR 
immediately, the referee concluded that Attorney Knight had 
violated SCR 22.03(6).11 
¶27 After independently reviewing the matter, we adopt the 
referee's findings of fact.  We also agree that those facts 
demonstrate that Attorney Knight committed each of the seven 
counts of professional misconduct alleged against her.   
                                                 
10 Former SCR 20:7.1(a) states, in part, that "[a] lawyer 
shall not make a false or misleading communication about the 
lawyer or the lawyer's services." 
11 SCR 22.03(6) states, "In the course of the investigation, 
the [attorney's] wilful failure to provide relevant information, 
to answer questions fully, or to furnish documents and the 
[attorney's] misrepresentation in a disclosure are misconduct, 
regardless of the merits of the matters asserted in the 
grievance." 
No. 
2006AP2461-D   
 
17 
 
¶28 With respect to the level of discipline, the referee 
recommended that Attorney Knight's license to practice law in 
Wisconsin be suspended for a period of 90 days and that she be 
required to pay the costs of this disciplinary proceeding. 
¶29 Concerned that the recommended discipline may not be 
adequate for the seriousness of the professional misconduct, we 
directed both Attorney Knight and the OLR to show cause why the 
discipline should not be a six-month suspension.  Attorney 
Knight failed to file a response to the order to show cause. 
¶30 The OLR filed a response that continued to request a 
90-day suspension.  The OLR acknowledged that whether Attorney 
Knight's suspension should be for 90 days or for a period of six 
months or more, which would require a formal petition and 
hearing for reinstatement, was a close call.  It stated that it 
had considered Attorney Knight's conduct to fall between two 
cases.  Compare In re Disciplinary Proceedings Against Fischer, 
176 Wis. 2d 145, 499 N.W.2d 677 (1993) (60-day suspension 
imposed where attorney signed and filed pleadings and briefs 
without adequately reviewing them and ensuring the accuracy of 
the factual assertions and the validity of the legal positions) 
with In re Disciplinary Proceedings Against Ness, 2002 WI 114, 
256 Wis. 2d 33, 651 N.W.2d 724 (nine-month suspension imposed 
where Wisconsin attorney misrepresented his license status and 
authority to appear pro hac vice in several Minnesota courts and 
made misrepresentations in advertising his Minnesota-based law 
firm with little or no acknowledgement of wrongdoing). 
No. 
2006AP2461-D   
 
18 
 
¶31 The OLR also stated that the default nature of the 
disciplinary proceeding may have kept some mitigating factors 
from being fully disclosed.  First, it noted that, with the 
exception of providing certain documents as discussed below, 
Attorney Knight had cooperated with the vast majority of the 
OLR's investigation, including providing a personal interview 
with the OLR investigators, and had expressed "some remorse."  
Second, the OLR discovered through its investigation that after 
learning of Eleby's wrongdoing, Attorney Knight followed up on 
some cases, cooperated with law enforcement, and personally made 
payments to clients who had not received the monies that were 
due to them.  The OLR also emphasized that it had uncovered no 
evidence that Attorney Knight had personally obtained any 
improper profits from Eleby's misconduct or her own.  Indeed, 
the OLR indicated that because of Attorney Knight's limited 
experience as a lawyer, it felt that Attorney Knight had looked 
to Eleby as a mentor, "and therein became somewhat of a victim 
herself." 
¶32 In addition to explaining the basis for its request 
for a 90-day suspension, the OLR also reiterated a request that 
the reinstatement of Attorney Knight's license to practice law 
in Wisconsin be conditioned upon providing proof that she has 
made the appropriate payments to clients E.C. and G.F.  See, 
e.g., In re Disciplinary Proceedings Against Pitts, 2007 WI 112, 
___ Wis. 2d ___, 735 N.W.2d 917 (attorney's reinstatement 
following 60-day suspension conditioned on creation of office 
management and business plan and quarterly furnishing of client 
No. 
2006AP2461-D   
 
19 
 
trust account records); In re Disciplinary Proceedings Against 
Kitchen, 2004 WI 83, 273 Wis. 2d 279, 682 N.W.2d 780 (attorney's 
reinstatement 
following 
60-day 
suspension 
conditioned 
on 
providing certain records to OLR).  Although the OLR did not 
indicate that it believed Attorney Knight had converted any of 
those clients' funds, Attorney Knight failed to submit the 
receipts to verify her assurances that the proper payments had 
been made. 
¶33 While we acknowledge Attorney Knight's inexperience, 
her expression of remorse, her attempts to rectify some of the 
harm to clients, and the lack of evidence that she explicitly 
knew of Eleby's conversion of funds, we cannot agree with a 
characterization of Attorney Knight as a "victim."  She 
knowingly allowed an individual who was not licensed in 
Wisconsin to use her name and attorney number to represent 
clients in the courts of this state.  Moreover, she allowed 
Eleby to cash and disburse checks that were made out to her and 
to her trust account apparently without any effort to ensure 
that the clients received the funds to which they were entitled.  
These actions ultimately led to the theft of funds that belonged 
to clients for whom Attorney Knight was responsible.  Further, 
Attorney Knight's failure to maintain and utilize an appropriate 
client 
trust 
account 
demonstrates 
an 
alarming 
lack 
of 
understanding or a disregard of one of a lawyer's core duties——
protecting the interests of clients and their property.   
¶34 We 
view 
Attorney 
Knight's 
repeated 
acts 
of 
professional misconduct as serious breaches of her obligations 
No. 
2006AP2461-D   
 
20 
 
as an attorney in this state.  Based on the totality of the 
facts before us, we conclude that Attorney Knight's license to 
practice law in Wisconsin must be suspended for a period of four 
months.  In addition, we adopt the OLR's request that the 
reinstatement of her license to practice law in this state be 
conditioned upon providing acceptable proof to the OLR that 
Attorney Knight has paid all of the necessary amounts to clients 
E.C. and G.F.  
¶35 IT IS ORDERED that the license of Attorney Phaidra S. 
Knight to practice law in Wisconsin is suspended for a period of 
four months, effective as of the date of this order. 
¶36 IT IS FURTHER ORDERED that reinstatement of Attorney 
Phaidra S. Knight's license to practice law in Wisconsin is 
conditioned on providing written documentation, in a form 
reasonably acceptable to the Office of Lawyer Regulation, that 
Attorney Knight has paid to clients E.C. and G.F. all funds to 
which they are entitled. 
¶37 IT IS FURTHER ORDERED that within 60 days of the date 
of this order, Attorney Phaidra S. Knight shall pay to the 
Office of Lawyer Regulation the costs of this proceeding.  If 
the costs are not paid within the time specified and absent a 
showing to this court of her inability to pay those costs within 
that time, the license of Attorney Knight to practice law in 
Wisconsin shall remain suspended until further order of this 
court. 
¶38 IT IS FURTHER ORDERED that if she has not already done 
so, Attorney Phaidra S. Knight shall comply with the provisions 
No. 
2006AP2461-D   
 
21 
 
of SCR 22.26 concerning the duties of a person whose license to 
practice law in Wisconsin has been suspended. 
 
No. 
2006AP2461-D   
 
 
 
1