The High Court has recently provided useful clarification on a question that frequently arises during detailed assessment: must a receiving party always provide a breakdown of litigation costs where services are arranged through an intermediary or agency?

Paying parties have increasingly argued that where a third-party provider sits between the solicitor and the professional delivering the service, a detailed breakdown of the underlying fees should be disclosed. The argument is usually framed as a matter of transparency, allowing the court to determine whether the amount of costs claimed is reasonable.

However, the High Court has confirmed that there is no automatic requirement for a breakdown of litigation costs in every case. The decision in Motor Insurers’ Bureau v Santiago provides helpful guidance for litigators and costs professionals dealing with challenges to agency or intermediary charges.

For those involved in costs recovery, the judgment reinforces the principle that the court will only require additional information where it is genuinely necessary to assess the reasonableness and proportionality of the legal costs claimed.

 

Do You Always Need a Breakdown of Litigation Costs?

No. The High Court confirmed in Motor Insurers’ Bureau v Santiago that a breakdown of litigation costs is not automatically required in every case.

Instead, the court will consider whether further information is necessary in order to assess the reasonableness of the legal costs claimed. If there is no evidence suggesting excessive charging or improper conduct, the court may consider the invoice itself sufficient evidence of the cost incurred.

This means that paying parties cannot routinely demand a detailed breakdown simply because an intermediary or agency was involved in arranging the service.

 

What Is a Breakdown of Litigation Costs?

A breakdown of litigation costs refers to a detailed explanation of the individual charges that make up a party’s legal costs in litigation. This may include solicitor fees, expert fees, court fees, and other litigation expenses.

During costs recovery, paying parties sometimes request this level of detail in order to challenge whether the amount of costs claimed is reasonable or proportionate. These disputes frequently arise during detailed assessment proceedings where the losing party has been ordered to pay the costs of the successful party following a court hearing.

In many cases, however, the invoice or bill itself may provide sufficient information for the court to determine whether the costs claimed are recoverable.

 

Why Disputes Over Cost Breakdowns Arise

The question of whether a breakdown of litigation costs is required often arises where services have been arranged through a third-party intermediary.

Modern litigation regularly involves a variety of external providers. Solicitors may instruct agencies that coordinate services such as expert evidence, translation work, or specialist litigation support. In these situations, the invoice presented in the bill of costs may come from the intermediary rather than the individual supplier.

Paying parties sometimes argue that this structure prevents proper scrutiny of the charges and seek disclosure of the underlying costs. The purpose is usually to determine whether any additional uplift has been applied by the intermediary.

These arguments frequently arise in cases involving personal injury claims or other civil litigation where the court decides which party to pay the legal costs following judgment.

 

The High Court Decision in Motor Insurers’ Bureau v Santiago

The issue was considered directly by the High Court in Motor Insurers’ Bureau v Santiago.

The paying party argued that the receiving party should disclose the underlying costs incurred by the intermediary in order to demonstrate that the sums claimed were reasonable. In effect, they suggested that a breakdown of litigation costs should be mandatory whenever an agency had been used.

The High Court rejected that position.

Instead, the court confirmed that there is no general rule requiring a detailed breakdown simply because a service was provided through an intermediary. The key question is whether the information available allows the court to determine whether the legal costs claimed were reasonably incurred and proportionate.

If there is no evidence suggesting that the costs claimed are excessive or abusive, the court may consider the invoice sufficient evidence of the cost incurred.

The judgment therefore reinforces the principle that costs assessment should remain proportionate and should not impose unnecessary evidential burdens on the receiving party.

 

When a Breakdown of Litigation Costs May Be Required

Although the High Court rejected the idea of a mandatory breakdown in every case, the court retains discretion to require additional information where appropriate.

A breakdown of litigation costs may be required where:

• There is evidence suggesting potential abuse or irregularity in the charging structure
• The charges appear disproportionate to the value or complexity of the claim
• The paying party raises a credible challenge supported by evidence
• The court requires further information to determine the reasonable amount of costs

In these circumstances, the court decides whether further documentation is necessary in order to properly assess the recoverable legal costs.

 

Costs Disputes in Modern Litigation

Disputes about recoverable costs arise in a wide range of civil litigation. Following judgment, the court will often make a costs order determining which party must pay the costs of the other.

The successful party will usually seek recovery of their legal costs from the losing party, although those costs may still be subject to detailed assessment if the parties cannot reach agreement.

These disputes may also arise in the context of Part 36 offers or other offers to settle made during the litigation process. Where settlement negotiations fail, and the matter proceeds to a court hearing, the court will ultimately determine liability for costs.

In some cases, the claim may be allocated to the small claims track, where recovery of legal costs is limited. In higher value litigation, however, the recoverability of costs may be more substantial unless the case falls within the fixed recoverable costs regime introduced and expanded in October 2023.

Regardless of the procedural framework, the court’s task remains the same: to determine whether the legal costs claimed were reasonably incurred and proportionate to the matters in dispute.

 

Practical Implications for Costs Draftsmen

For practitioners involved in preparing or challenging bills of costs, the decision in Motor Insurers’ Bureau v Santiago provides useful clarification.

Importantly, the judgment confirms that an invoice issued by an intermediary may be sufficient evidence of the cost incurred. Paying party challenges should therefore be supported by evidence rather than speculation about potential mark-ups or commissions.

For costs professionals preparing bills of costs, the decision highlights the importance of ensuring that entries clearly explain the purpose of the work undertaken and the context in which the cost was incurred.

Where the bill provides sufficient information for the court to understand the work completed and the charges involved, the court may consider a detailed breakdown unnecessary.

 

Alternative Dispute Resolution and Costs

As with many costs disputes, issues concerning intermediary charges may sometimes be resolved without the need for a contested hearing.

Parties may seek to resolve disagreements through alternative dispute resolution, including negotiation or mediation. Reaching agreement on costs can avoid the time and expense associated with detailed assessment proceedings.

Where agreement cannot be reached, the court will ultimately determine the matter and make the appropriate costs order.

 

FAQs

What is a breakdown of litigation costs?
A breakdown of litigation costs is a detailed explanation of the individual charges that make up a party’s legal costs in litigation, including solicitor fees, expert fees, and court fees.

Does the court always require a breakdown of litigation costs?
No. The High Court confirmed in Motor Insurers’ Bureau v Santiago that a breakdown is not automatically required. The court will only request further detail where it is necessary to assess the costs claimed.

Can a paying party demand disclosure of underlying invoices?
Not automatically. A paying party must usually demonstrate a legitimate reason for requesting further documentation before the court will require additional disclosure.

When might the court require more detailed cost information?
The court may request further information where the charges appear disproportionate or where there is evidence suggesting irregularity or excessive charging.

 

How Greener Costs Can Assist

Disputes regarding intermediary charges and the need for a breakdown of litigation costs are becoming increasingly common during detailed assessment.

At Greener Costs, our experienced team of Costs Draftsmen and Costs Lawyers regularly assist practitioners with preparing and challenging bills of costs, advising on costs recovery, and supporting negotiations where costs disputes arise.

We work with law firms across England and Wales to ensure that claims for legal costs are clearly presented, properly supported, and robustly defended when challenged.

Greener Costs is also the UK’s first net positive legal costs company. Our operations are fully paperless, and we plant 25 trees for every instruction, helping law firms offset their carbon footprint while receiving expert costs support.

If you would like to discuss a costs matter or require assistance with a detailed assessment, our team would be pleased to assist. Enquire today using the form below or by sharing some details of the case to info@greenercosts.co.uk.