Judith and Alan Are Attorneys and Partners in a Two-Attorney

Judith and Alan are attorneys and partners in a two-attorney law firm. The law firm has been successful in establishing a practice focusing on ERISA law. Although both Judith and Alan are involved in management of the firm, Judith is responsible for most personnel and operational matters, and Alan is responsible for most bookkeeping and computer system matters. Judith is aware that Alan has been gambling on regular basis at a casino on a nearby Indian reservation. Judith also told Alan that, due to his gambling habit, she has started monitoring the business and trust accounts. One day, Alan takes $5,000 from the firm's trust account so he can use it for gambling at the casino, and Judith learned of Alan's conduct before he went to the casino, but did nothing to stop Alan. Is Judith subject to disciplinary action for Alan's use of the client funds in the trust account?

A) Yes, because Judith is a partner in the law firm and required to make reasonable efforts to make sure all other attorneys in the firm follow the Model Rules.
B) Yes, because Judith knew of Alan's potential conduct before Alan went gambling and could have avoided or mitigate the loss of client funds, but failed to do so.
C) No, because Alan was the partner responsible for the firm's trust account and knowledge of Alan's gambling habit is not enough to support disciplinary action.
D) No, because partners in a law firm are not subject to discipline for violations of the Model Rules, with the exception of imputed conflicts of interest.

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