What if the bank in which an attorney has his trust account goes under? As a general rule, if the account is set up properly, each of the attorney’s clients has $100,000 of FDIC protection, even if the trust account holds substantially more than that.
It gets much more complicated, as Virginia State Bar Ethics Counsel James M. McCauley points out in an article on the VSB Web site, if the attorney is holding more than $100,000 of an individual client’s funds or the client has other accounts at the bank.
McCauley has some suggestions for ways to minimize the possibility of personal liability for an attorney if a bank goes belly up. First on the list is staying away from any bank that appears to be in financial difficulty.
By Alan Cooper