Clinical negligence: Fixed fee uncertainty
Law firm revenue from clinical negligence grew by 8.1% to £1.7bn in the year to 31 March and is predicted to grow at the same rate over the next two years.
Researchers said claimant legal fees increased by 13% to £620m with defence legal fees rising more slowly to £181m.
IRN Legal said total expenditure on claims settled by the NHS increased by 9.5% in 2024/25 to £3.1bn from over £2.8bn in 2023/24.
“In the coming year, we expect both claims registered and settled to increase. In the last three years, claims registered at both the CRU [Compensation Recovery Unit] and NHSR [NHS Resolution] have grown in each year and, in the medium term, this points to an increase in claims settled or closed.
“Annual market value growth is forecast to be around 7-8% for each of the next two years.”
Law firm revenue from clinical negligence fell by 3.8% in 2020-21, before rising by over 8% the following year. However, it grew by only 1.9% in 2022-23 before rising by over 7% in 2023-24.
Legal fees paid by the NHS, mainly claimant legal costs, also continue to grow, exceeding £800m in 2024/25 from £714m the previous year. Claimant legal costs were just over £620m, a “significant increase” from over £545m. Defence legal costs grew to over £181m from £169m in 2023/24.
In its UK clinical negligence 2025 market trends report [1], IRN combined these figures (allowing for 20% to go towards after-the-event insurance premiums) with estimated success fees, payments from other sources like legal expenses insurance, and cases involving non-NHS providers.
IRN said one “block on growth” could be the possibility of fixed recoverable costs being introduced for lower-value clinical negligence claims worth up to £25,000.
First proposed by the Conservative government, Labour “seemed to have kicked this into the long grass”. However, in the minutes of the Civil Procedure Rules Committee meeting in June this year, Mr Justice Trower, chair of the costs sub-committee, said the government was “considering the way forward” and an announcement was “anticipated in due course”.
IRN said that, while other areas of the personal injury market were “facing declining claims volumes”, the clinical negligence sector was “likely to see some increase”.
Claims registered at the CRU increased by 3.5% in 2024/25, to 16,395. However, in the second quarter of 2025, they grew by almost 21% compared to a year earlier.
Despite the forecasted growth in revenue, researchers said the number of claimant law firms was expected to continue to fall.
“The claims sector is still dependent on a relatively small number of cases. Some of these can result in large payouts and high legal fees but the long delays that can arise before any compensation payments are made can lead to short and medium-term cashflow problems.
“These financial issues will be too much of a stumbling block for some smaller firms.”
After three years of growth, the number of clinical negligence cases settled in 2024/25 decreased by 5% on the previous year to over 16,500.
Researchers said they expected a growing focus on alternative dispute resolution (ADR) methods, like arbitration and mediation, to speed up case resolution and ease the court system’s workload.
“Birth injury claims take a large part of the value of all claims – damages are likely to relate to life-long care which begins at a much earlier age than many other claims – and there is likely to be more emphasis on ADR in this area and earlier plus speedier resolution of claims.”