Regan, Riley, Madison, and Mackenzie were partners in a law firm. Regan gave the other

partners written notice that he was leaving the partnership on March 31. The other

partners purchased Regan's interest and agreed that he would not be liable for any future

partnership debts. At the end of May, it was discovered that Riley had, during the previous

month, made various investments on behalf of a couple of elderly clients. The investments

were either unsecured or undersecured and the elderly clients lost over $250 000. None

of the other partners were aware of Riley's activities although the law firm had occasionally

invested funds on behalf of clients in the past.

Who is responsible for the elderly client's losses?

What precautions could the partners have taken to prevent this situation?

Would it make any difference if it was a limited liability partnership in Newfoundland and

Labrador?