The NHS Litigation Authority (NHSLA) paid out £195m in costs to claimant clinical negligence lawyers over the past year, a rise of 61% on the previous 12 months, its annual report has revealed.
Defendant lawyers also saw their costs shoot up 47% to £62m.
Chief executive Steve Walker blamed the recoverability of success fees and after-the-event insurance for making litigation “so profitable that solicitors and so-called ‘claims farmers’ are drawn into the market, thereby fuelling the rise in claims volumes we have experienced”.
New claims against the NHS rose 30% last year, to 8,655 clinical claims and 4,346 non-clinical, having gone up around 10% in each of the previous two years.
The report said the growing use of conditional fee agreements “has also meant that claimants’ costs are almost invariably disproportionate, often significantly, to the amount of damages paid, particularly in low-value claims”.
In the 5,398 clinical negligence claims the NHSLA closed with a damages payment last year, 76% of the £257m costs went to claimant lawyers. The claimant costs figure had gone up significantly, but not as sharply, in previous years, from £85m in 2004/5 to £121m in 2009/10.
The defendant costs figure climbed significantly after years of a downward trend. In 2009/10 it was £42m, having declined from £59m five years before.
Though Mr Walker expressed his “delight” that the Ministry of Justice is taking forward Lord Justice Jackson’s recommendations to end recoverability, the report said the increase in claims may be explained “to some extent” by the requirement for claimants to send the NHSLA a copy of the letter of claim at the same time it is sent to the defendant NHS body, at which point the authority now records the claim.
It said: “We are analysing patterns and trends to obtain a better understanding of the reasons behind the increase.”
In all, the NHSLA paid out £911m in 2010/11 but the report cautioned against relating this to the legal costs figure, saying that it is only possible to provide meaningful data on the ratio between costs and damages when a claim has been closed and all the related payments have been made.
It emerged recently that a pilot of a fast-track scheme to deal with low-value claims against the NHS will begin next April.