New restrictions on the amount lawyers can charge trusts when bringing clinical negligence cases against them could save the NHS £50m a year, the government has claimed.
Under existing rules, solicitors acting for a claimant can claim costs from the defendant, often trusts, for each hour worked. This approach will be replaced with a system of fixed fees for different types of cases from April 2024, according to a consultation response published today.
NHS Resolution paid out almost £2.7bn to settle claims in 2022-23, according to its annual accounts. Legal costs make up roughly a quarter of this figure.
A government impact assessment claims the reforms, which would apply to ‘lower value’ cases where the claim settled is no more than £25,000, could save the health service £500m over the next ten years. Around half of existing claims could be affected by the changes, it suggests.
The IA says legal costs are often “disproportionate… to the value of damages awarded and associated defence costs”. Average claimant costs of £22,000 per case in 2020-21 were roughly double the average amount of damages awarded.
It continues: ”This puts additional strain on limited NHS budgets and would only increase in the future as damages and claimant legal costs rise. Clinical negligence is one of the last remaining areas of personal injury claims in which the legal costs recoverable from the defendant are not currently fixed for claims with lower damages. The current regime leads to a misallocation of time and resources. Government intervention…is necessary to streamline the legal process and bring proportionality to the clinical negligence market.”
The announcement follows a 2019 review that recommended a bespoke system of fixed legal costs. The government consulted on its proposals for a new system in 2022 but legal firms raised concerns that the fee levels had been set too low and would make some cases unaffordable for lawyers to take on.
The impact assessment acknowledges that the changes could lead to a “focus on speed rather than quality” but argues the legal market should be able to adapt to the changes.
In response to earlier criticism, the government has set out what it calls a “significant increase” to the fee levels, of up to £5,750 plus 30 per cent of damages paid for the highest-paid types of claims. There are additional payments for claims involving children and people who do not have mental capacity.
Health minister Maria Caulfield said the reforms would mean a “better balance” between costs and compensation.
She said: “Those providing legal representation are due fair remuneration for providing these services but this should not be out of proportion to the claim or be to the detriment of justice or front line services.”
Source: HSJ
Date: 18 September