Legal Costs Rising, Fixed Costs Policies & Desire to Settle Claims more Quickly - What we can learn from the NHSR Annual Report 2023-24

 

The NHSR Annual Report for 2023-24 has been published and includes some interesting data & comments pertaining to legal costs. Much of the evidence base will be used to underpin a push for reform from government, though as always behind the data there is nuance. 

 

The key takeaways are: 

 

Damages, Claimant & Defendant costs have all increased - Claimant legal costs paid out in the period total £545 million. The NHS' own legal costs stand at £169 million. Damages paid out by comparison stand at £2,107 million. 

 

Damages, Claimant costs and Defendant costs have all increased compared with the previous year, though Claimant costs have increased by 11.1% compared to an increase in Defendant costs of 6.4%. The report, however, sets out that the increase in Claimant legal costs is contributed to by an increase in cases resolved between £250,000 and £4.75million. 

 

It’s also worth mentioning that average legal cost increase was lower than previously expected. 

 

Average Claimant costs exceed damages for low value Clinical Negligence claims for the first time - For claims valued up to £25,000 average Claimant costs were £26,095. The first time average costs exceeded value for lower damages claims. This clearly can't be viewed in a vacuum. 

 

The NHS has either proceeded to assessment in these costs claims or has settled these costs claims without assessment at a level they feel to be reasonable else they would not have settled for these sums! If a paying party felt a costs claim was unreasonable then it is open to them to seek assessment by the court. 

 

We also don’t know how the Claimant’s costs claim is made up. Good examples are ATE premiums (which through government legislation remain recoverable) and expert report fees. In the context of the floated fixed recoverable costs reforms these will have no direct impact on either of these elements (in principle). It’s a point worthy of consideration as fixed recoverable costs may not actually generate the levels of savings envisaged. 

 

Moreover, the NHSR will not have ATE insurance (for self-evident reasons) and in cases where expert evidence is disclosed early may not elect to obtain their own evidence. These are all factors as to why disparities exist between Claimant and Defendant legal costs. This does not even address the commercial realities allowing the NHS to source legal representation at lower expense than Claimants are often able to do so. 

 

The data also shows that for claims with a value of between £25,000 to £100,000 (potentially claims which could fall on to the Intermediate Track and be fixed recoverable costs) have average claimant legal costs of £54,978. It’s worth noting that this is still below the average high of £60,720 in 2016/17 though above the subsequent low of £46,808 in 2019/20. Over this period we have seen inflationary pressures and increases to Guideline Hourly Rates which will also inevitably have some impact. 

 

Fixed Recoverable Costs remain on the agenda for the NHSR – The annual report references the introduction of Fixed Recoverable Costs as something they expect to reduce legal spend on claims. The report states that 50% of successfully resolved clinical negligence claims have a damages value of £1,501 to £25,000. This signals that a significant number of claims are likely to fall into any lower damages fixed costs scheme. 

The report does go on to specifically cite the scheme for fixed costs in lower damages (sub £25k) clinical negligence claims. It's clear the NHSR still want the new government to enact this policy change even though uncertainty remains over it. 

 

More work in-house? - The report states that the NHS plan to bring more claims in-house to reduce legal spend. Will we see investment in NHS’ in-house legal services to be able to deliver this? A desire to move more work in-house will invariably require greater resource. 

 

More claims settle without court proceedings – The data shows that 81% of clinical negligence claims settled without the issue of proceedings, compared with 66% in 2016/17. The rate of cases settling without proceedings has increased year on year since 2016/17. 

 

ADR including Resolution meetings, Mediation and stock takes have all been used to positive effect in settling claims. The NHSR are also piloting Early Neutral Evaluation, a process which is set to form part of the lower damages clinical negligence fixed costs reforms. 

 

Fundamental Dishonesty & Exaggerated Claims – There is a commitment by the NHSR to take action against “dishonest and exaggerated claims” and examples are given of cases where Claimants have not recovered any damages and have been ordered to meet the NHS’ costs. Fundamentally dishonesty (FD) remains another contentious topic in the litigation and costs arena with the CPRC earlier this year committing to looking into the issue of claims where FD is alleged but not proven and whether there ought to be costs consequences. The commitment came after we raised the issue directly with them. 

 

 

There is a high degree of uncertainty over both damages and legal spend. What can be said (and is said every year) is that the most effective way to reduce legal expenditure as a whole is to avoid instances of negligence in the first instance. 

 

The report offers an interesting insight into the cost of and approach to clinical negligence claims. There’s clearly a desire (within the report) to ensure claims can be resolved more quickly and outside of litigation. There is also a wish to utilise different ADR mechanisms in support of this. Moreover, we can see a plan to move more claims in-house. It’ll be interesting to see how that develops in the coming years. 

 

Fixed costs remains on the NHSR’s agenda. The sub £25k clinical negligence fixed costs scheme remains the responsibility of the Department of Health & Social Care so it is perhaps no surprise that the NHSR’s views echo those of the DHSC. 

 

So what does success look like for the NHSR? Improving patient safety must be a key priority and if there is improvement upon this then it will surely feed into issues and concerns around the costs of claims. Where things do go wrong then seeking earlier resolutions of claims has to be welcomed also. This will not only generate costs savings but also improve the experience of negligence victims. 

 

Through all of the data I hope that patients are not forgotten. A drive to reduce legal costs may provide a short term reduction to expenditure but if that comes at the expense of diminished access to justice and sees no real term reductions to clinical negligence incidences or increases in patient safety then we will all be poorer for it.