Regrettably, clients sometimes receive a bill from their law firm which does not seem quite right. Supported by a comprehensive narrative of dates and time spent, everything appears to add up. Yet the overall substance feels distinctly opaque.
Costs may be lurking somewhere beneath the detail, though what they relate to is unclear. They may have passed through a third party, or a subsidiary company within the same group, but their precise origin remains a matter of conjecture.
So, does a lack of transparency concerning the ultimate service provider really matter? According to the recent High Court decision in Motor Insurers’ Bureau v Raphael De Lima Santiago, not very much. This decision confirmed that solicitors do not need to provide a full breakdown of outsourced litigation costs in every case, even where the service provider sits within the same corporate group.
At first blush, Mr Justice Moody’s decision, handed down in February 2026, is reassuringly orthodox. The judge confirmed that no general rule applies which necessitates a fully itemised breakdown of every litigation disbursement. Instead, the court’s task remains what it has always been under CPR Part 44: to assess whether the overall cost was reasonably incurred and whether the amount is proportionate.
The existence, or absence, of a granular breakdown is not therefore the critical determining factor – a conclusion which will come as a relief to many practitioners.
The reality, of course, is that litigation in 2026 can rarely be viewed through the prism of a single law firm. More typically, it is multifaceted and delivered by a spectrum of service providers: costs consultants, medical reporting agencies, e-disclosure platforms, translation services and others.
Increasingly, these providers may either sit within the same corporate group, or operate under tightly managed commercial arrangements. The notion that every constituent element of that ecosystem should be detailed line by line, as a matter of routine, does not sit comfortably with the realities of commercial pragmatism.
The facts of the Motor Insurers’ Bureau (MIB) case neatly illustrate the point. The claimant, now the respondent, Raphael De Lima Santiago, was injured when riding his motorcycle on 22 May 2018. The first defendant, Joshua Odubolo, was uninsured and so the MIB, now the appellant, was joined as the second defendant.
Having settled his personal injury claim on the first day of trial for £20,000 plus costs, Santiago then decided to bring a case against the MIB on a point of principle. This related to an interpreter’s fee of £924, which was invoiced through a company connected to the claimant’s solicitors. Santiago argued that, without a breakdown showing how much of that sum actually reached the interpreter, the court could not assess whether part of the charge was in reality an irrecoverable agency fee, or disguised profit.
The High Court disagreed. Because there is no rule of law or code of practice which mandates such a level of dissection, the question for the court is whether it has sufficient material to assess reasonableness and proportionality. To determine these criteria may, or may not, require more detail.
The ruling highlights a wider trend of scrutiny where firms instruct connected businesses, such as medical agencies, costs firms and translation providers. Although it does not signal a retreat from scrutiny, it does reflect a shift in how that scrutiny should be applied. For many years, costs arguments have largely been concerned with form, based on questions such as: is this properly characterised as a disbursement? Has it been sufficiently broken down? Does it fall within or outside a particular category?
The MIB decision suggests that the courts are less concerned with categorisation and more interested in substance rather than form. Their focus is more holistic: What was the service? Was it necessary? Is the total figure reasonable when viewed against the market? This approach is consistent with earlier authority. The distinction between solicitors’ profit costs and disbursements was well explained by May J in Crane v Canons Leisure Centre [2007] EWCA Civ 1352, where he held that: ‘A characteristic of whether charges of a person engaged by solicitors are profit costs or disbursements is whether the solicitors have personal responsibility to the client for the work done.’
The distinction has never exclusively been about labels, but rather the underlying reality of the arrangement. What has changed is the context. The legal services market has evolved since the Legal Services Act 2007 paved the way for alternative business structures and greater integration between legal and non-legal services.
It is now commonplace for firms to operate alongside, or within, networks of affiliated providers. Medical agencies, costs firms and translation companies are often not independent in any meaningful sense, but are instead part of a broader commercial model.
In delivering greater efficiencies, that blended model also creates tension. The closer the relationship between a law firm and its service providers, the harder it becomes to distinguish between an external cost and an internal revenue stream. In costs law, this distinction matters. Parties are entitled to resist the recovery of sums which are, in substance, profit costs dressed up as disbursements. The MIB decision does not, however, resolve tension – but simply reframes it.
The court was clear that there may be cases where a breakdown is required, particularly when questions arise about abuse or where the available material is insufficient to test the claim. But the judge declined to impose a blanket rule. Instead, his judgment placed emphasis firmly on the evaluative exercise at the heart of any assessment: is the figure reasonable and proportionate on the facts?
For practitioners, that creates a slightly uncomfortable middle ground. Although firms are not required to open up their entire cost structures as a matter of course, even where connected entities are involved, they cannot assume that affiliation will be ignored. Where the relationship appears too close, or the figure too convenient, the court retains a broad discretion to probe further.
This can be seen in adjacent areas. The current scrutiny of medical agency fees, including JXX v Archibald, shows the courts’ willingness to interrogate what has been charged, as well as how and why those charges arose. The focus is increasingly on economic reality rather than formal presentation. That trend is unlikely to stop; if anything, it will intensify.
As litigation becomes more specialised and more fragmented, the traditional law firm model continues to evolve. As firms become service coordinators as much as providers, the boundaries between solicitor, expert and supplier are increasingly fluid. Against that background, the court’s role as arbiter of what is recoverable becomes even more important.
MIB demonstrates that the courts do not seek to police this evolution through rigid disclosure rules, but through a more flexible, and arguably more demanding, inquiry into reasonableness and proportionality.
That test is more nuanced, reflecting the reality of modern litigation. But uncertainty persists about where the line should be drawn between legitimate commercial arrangements and situations where the courts may expect greater transparency.
Ultimately, clearer judicial guidance may be needed on disclosure, conflicts and the recoverability of costs when firms rely on associated service providers.
Matthew Kain is CEO of Kain Knight
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