Public spending watchdog the National Audit Office has urged the government to curb legal costs arising in lower-value clinical negligence claims. In a report published today, the NAO points out that lawyers’ fees are now 3.7 times higher than the damages awarded to claimants in cases worth less than £25,000.

The watchdog stops short of calling for fixed costs in these claims – as proposed by the last government – but recommends that ministers consider whether the current approach to costs remains ‘proportional’.

Of the £183m cost of lower-value claims in 2024/25, £98m (54%) went to claimant legal costs, £45m (25%) to NHS defence costs, and only £39m (21%) to damages. Claimant legal costs and NHS defence costs for settled claims now account for 79% of the cost of low-value claims, up from 67% in 2006/07.

The NAO is also keen to address claimant costs in particular, recommending that the government explore options for greater transparency over the fees agreed between clients and their lawyers.

Overall spending on clinical negligence rose from £1.1bn in 2006/07 to £3.6bn in 2024/25, due to increased claim numbers and the rising costs of settlements.

The volume of claims has remained relatively stable since its 2016/17 peak. The report acknowledges that the major driver of cost currently is a small number of high-value claims. Costs are also rising because of medical advances and increasing life expectancies. The report urges the government to consider whether the requirement to calculate damages based on privately funded care packages ‘remains aligned with DHSC’s vision of a modern NHS’.

Responding, the Association of Personal Injury Lawyers (APIL) said the increased compensation bill is not the fault of injured patients or their representatives.

APIL executive committee member Suzanne Trask said: ‘The NAO has made much in its report of increases in claimant legal costs, while glossing over the fact that this has been propelled by a significant increase in delays to claims.’