Legal costs across the board rose for clinical negligence claims last year, despite efforts to resolve cases earlier.
NHS Resolution's annual report and accounts for 2024/25 reveal that claimant legal costs rose 14% to £621m, while defence lawyer costs increased by 7% to £181m.
Damages payments to claimants went up by 8.5% to almost £2.3bn – meaning costs overall from medical negligence claims tipped over £3bn. Taking into account periodical payments, which are staggered from settlements made in previous years, the estimated ‘cost of harm’ to the NHS was around £4.9bn.
The figures, published this week, come at a time when the cost of clinical negligence is coming under close scrutiny from the National Audit Office which has undertaken a study of how spending can be reduced.
NHSR chair Sally Cheshire and chief executive Helen Vernon, introducing the report, said the NAO report was welcome given the sums involved. They added that this was a difficult year in which to manage costs given the shifting landscape in the sector.
‘We endeavour to investigate compensation claims thoroughly and deliver compensation in a timely manner where it is due,’ they said. ‘The pace and timing of resolution is, however, also determined by external factors over which we have limited influence. This year, that was exemplified by the unusual volatility in settlement behaviours driven by the uncertain timing and magnitude of the change to the personal injury discount rate.'
January's change to the discount rate applied to personal injury settlements reduced the amount claimants could expect to receive, they said. 'This meant we saw significant activity prior to the new rate taking effect followed by a lull as lawyers took stock of the impact on their clients’ cases.’
NHSR received 14,428 new clinical negligence claims and reported incidents, an increase of 5% on 2023/24. The organisation said there appears to be a trend similar to the one before the Covid-19 pandemic: the volume of new claims has now surpassed the previous peak in 2019/20.
Early settlement continues to be pushed by the NHSR and seems to be having some effect. In 2016/17, 66% of clinical claims were resolved without a formal court process; in 2024/25, it is 83%. In total, 11,110 clinical claims were resolved at an early stage, while the overall number of claims closed increased by 4% to 14,431.
Vernon added: ‘By working collaboratively to resolve claims for compensation against the NHS we are keeping patients, their families and healthcare staff out of court whilst sharing what we learn back with the NHS to prevent the same things happening again.
‘This means that over 11,000 people saw their claims resolved with mediation, negotiation and other non-adversarial processes without the need for court involvement.’
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