Clinical negligence: Will fixed costs be kicked into the long grass?
Consolidation in the clincial negligence market will continue as the market slows over the next couple of years, a report has suggested.
It predicted a “slowdown in NHS claims settled in the coming year” because of a drop in claims registered two years ago.
In the medium-term, the number of claims settled “should increase again, reflecting the growth in claims registered this latest year”.
Alongside claims against the NHS, “any significant growth in the market is more likely to come from other claims sectors such as care/nursing homes, equipment failures, and claims against unregulated practitioners such as some undertaking cosmetic surgery and non-intrusive procedures”.
In its UK clinical negligence 2024 market trends report, IRN estimated the total gross legal revenue from clinical negligence in 2023-4 at £1.58bn, up by 7.6% on the year before. The previous year saw growth of less than 2%.
Claimant legal fees in NHS cases rose sharply, from £490m to £545m, while defence legal fees increased from £159m to £169m.
Researchers said there was uncertainty whether the fixed recoverable cost (FRC) regime for low value clinical negligence cases worth up to £25,000 was “ever going to happen”. Under the previous government, it was meant to be implemented this month.
They went on: “So far, the new Labour government has made no mention of its plans for FRCs: the policy could be kicked into the long grass permanently or delayed until much later next year.”
IRN said that if FRCs were implemented, some law firms were “likely to decide that it is not worthwhile financially to take on these lower value claims, particularly where these claims are not straightforward.”
Even without FRCs, the number of claimant law firms in the field was “decreasing as M&A activity continues” and others left the sector.
“These trends are likely to continue as competition for a relatively small number of cases intensifies and as larger players cope better with often long delays before any compensation payments are decided with the resultant impact on short and medium-term cashflow.”
Researchers predicted that the focus on alternative dispute resolution (ADR) to speed up case resolution and ease the court system’s workload would grow.
There was likely to be more emphasis on ADR particularly in birth injury claims, which “take a large part of the value of all claims”.
The decline in clinical negligence cases going to court in England and Wales continued this year, falling from over 29% in 2018/19 to less than 19% in 2024.
The pandemic resulted in many routine operations and procedures being postponed and there was a backlog of NHS treatment, exacerbated by staff shortages and strikes.
“This continues to increase the pressure on NHS staff and systems which could lead to increased claims if delays and postponements lead to increased patient harm.”
Meanwhile legal action against negligence involving artificial intelligence (AI) was “getting nearer”.
While the “potential benefits of AI in the health sector are undeniable and the rollout of the technology has been relatively rapid”, AI systems could still “fail unexpectedly”.
