Everything You Need to Know About the Upcoming TAF Changes in British Columbia and Its Impact for Canadian Law Firm Operations 

The Law Society of British Columbia voted recently to update how the Trust Assurance Fee (TAF) is assessed, and these changes will alter how law firms track trust funds and manage their internal processes. Beginning January 1, 2026 the TAF will be payable for each client matter where more than $10,000 in trust funds is received after the effective date. This shift is designed to reduce the burden on low-value matters and resolve longstanding challenges related to “fees and retainers” exemptions. 

This change is the first of its kind in Canada, and we anticipate that this update will require operational, workflow, and compliance adjustments within a law firm. Below is a clear breakdown of what the new structure means, and how your law firm’s business can prepare in advance of the new rule coming into effect. 

What the New TAF Rule Changes: 

Under the Law Firm of British Columbia’s updated Rule 2-110, the TAF will apply once a client matter receives trust deposits exceeding $10,000 in aggregate, provided those deposits occur on or after January 1^st, 2026. Key elements include: 

• Per-matter assessment: the TAF attaches to the client matter, not the firm or the trust account as a whole 
• Dollar-based trigger: No TAF is owed until the total trust deposits for a matter exceed $10,000
• Transition safeguard: Deposits made before January 1^st, 2026 do not count toward the threshold 
• Clarification for retainers and fees: The rule simplifies the prior exemption issues by applying a clear threshold regardless of the fund’s purpose 

This brings greater transparency to when and why TAF applies, while protecting smaller files from incurring the fee. 

Who Benefits from These Changes? 

The impact of this updated rule varies depending on the firm’s practice mix. We anticipate that real estate firms, corporate practices handling large transactions, and litigation practices receiving significant settlement funds will see minimal change. The matters they handle commonly exceed the $10,000 minimum threshold, and so the TAF will continue to trigger at the same frequency. 

Meanwhile, firms with numerous low-value files, or high-volume practices that deal with very small retainers stand to benefit from this new rule. Areas like family law, wills/estates, and criminal defense where trust deposits often remain modest are more likely to benefit, as these smaller files now fall below the new TAF limit; reducing administrative load and overall cost. 

Operational Implications for Law Firms 

The rule change requires firms to revisit how they manage trust accounting. Several operational impacts are likely, as follows: 

1. Matter-level Deposit Tracing 

Current accounting systems may track trust deposits globally or by transaction category. Under the new rule, firms much ensure that: 

• Trust deposits are aggregated per matter, not per client or per account 
• Systems can automatically identify when a matter crosses the $10,000 threshold 
• Reports can clearly distinguish deposits that were made before and after January 1, 2026 

2. Accounting Reconciliation Adjustments 

Monthly trust reconciliations will need to incorporate new logic. Firms using legacy systems or manual reconciliation processes may need system modifications or additional steps. 

• Verifying TAF triggers per matter 
• Ensuring no pre-2026 deposits are counted
• Maintaining accurate audit trails for TAF assessments

3. Workflow for Receiving Funds 

Finance staff and lawyers will need updated procedures around intake of retainers, handling multi-stage payments, managing rolling deposits on long-running matters, and reviewing trust activity when large funds are expected imminently. This is particularly important for matters that will oscillate near the $10,000 threshold. 

4. Client Cost Handling 

Some firms treat TAF costs as an operating expense, while others pass it through to the client using disbursements. Regardless of which approach your firm uses, engagement letters and cost-transparency language may need to be updated. 

How Firms Should Prepare Before January 1^st, 2026 

To prepare for the new rule’s start date, firms should consider a structured update across finance, operations, and practice groups. 

1. Update Trust Accounting Software 

Firms using cloud-based systems may receive vendor-supported updates that will accommodate the new TAF rules, while on-premise systems or manual systems will require custom configuration. To maintain operational efficiency, key updates to this software should include: automated threshold tracking, date-based segregation of deposits, and TAF-related reporting. 

2. Revise Policies, SOPs, and Client Engagement Materials 

Clear, standardized instructions will help minimize compliance risks. Relevant documents to update may include: trust accounting policies, cash handling procedures, reconciliation checklists, matter-opening workflows, and billing and disbursement procedures. Beyond compliance documentation, client documentation such as engagement letters, standard fee agreements, and fee schedules may need to be updated with clear language. It is important to review all client-facing assets to ensure clients know exactly what to expect when engaging with your firm. 

3. Train Lawyers and Staff 

Lawyers who regularly accept retainers should understand the implications of multiple deposits adding up over time. Understanding what counts as a trust deposit versus which pre-2026 deposits do not count will be a crucial piece of information to ensure all members of the firm are aware of it. Additionally, more training may be required to ensure all members of staff are able to properly code deposits and withdrawals. 

4. Review Ongoing Matters Before the Transition 

Matters extending across the January 1^st transition date will require special attention. Firms should review files, ensuring pre-2026 deposits are documented and excluded from the threshold. Files likely to receive large deposits in 2026 should also be identified and planned for accordingly. This reduces the risk of misclassification and audit issues. 

Strategic Benefits of the New Structure 

The main driver behind this decision is to offer a straightforward, threshold-based approach to trust oversight. Beyond having additional compliance benefits, this new model can offer other advantages, such as more predictable budgeting for both firms and clients, reduced administrative burden for smaller maters, a clearer and more equitable assessment model that is tied to actual trust activity, and a more simplified process related to identifying retainers as separate from other deposits. Ultimately, we see these benefits as allowing BC firms to focus more on service delivery and less on classification complexity. 

Minimum-Threshold Rules Coming to the Rest of Canada? 

All provinces have extensive trust accounting and audit frameworks, however fee structures differ. So far, it seems that this unique minimum-threshold rule is not on the table to be adopted by other provinces at this time.  

The 2026 TAF rule change for British Columbian law firms is aimed to be make low value matters more streamlined and less burdensome for administrators. However, these changes may require firms to update internal processes, trust accounting systems, and staff workflows. Preparing early will help ensure a smooth transition, maintain compliance, and keep operations aligned with the Law Society’s new regulatory expectations. 

Actionstep Legal Accounting is able to meet the new TAF requirements for British Columbia. If you would like to learn more about how the platform works, we invite you to book a demo.