Law firms generate £1.4bn in fees from clinical negligence cases

Law firms generate £1.4bn in fees from clinical negligence cases

Clinical negligence law firms earned around £1.4bn in fees during 2021/22, an 8% increase on the year before, according to new research.

Legal Futures

It also predicted that the pressures put on the NHS by Covid, including record waiting lists and overworked and stressed staff who are “more likely to make mistakes”, could lead to more clinical negligence cases.

In the Clinical negligence 2022 market trends report, IRN Research estimated that £3.5bn was paid out in clinical negligence cases in 2021/22, mostly by public sector health bodies.

It calculated that around £1.4bn of this was legal fees, falling to a net figure of £917m – virtually unchanged on the year before – once the costs of running the cases law firms lost were taken into account.

NHS Resolution data showed how the nature of the cases handled by the main law firms varied significantly. At one extreme was City firm Fieldfisher, which in 2020/21 dealt with cases that on average generated total payments of more than £2m each, followed by Stewarts Law at £832,000.

At the other extreme were firms like Fletchers, which dealt with more cases than any other firm but generated by far the lowest average payout, £41,000. Thompsons had the next smallest cases, at an average of just under £200,000 per claim.

Fletchers (7.1%) and Irwin Mitchell (6.5%) were the only firms to handle more than 3% of claims arising from NHS trusts, but while the latter’s cases accounted for 13% of all the payments made, the former’s made up just 1.1%.

IRN found that case numbers rebounded by 7.3% in 2021-22, having fallen by 8.6% the previous year, but were still below pre-Covid levels.

It said: “The NHS entered the pandemic with a historic workforce crisis, and this has only worsened as many staff have become exhausted because of the Covid workloads.

“In addition, staff surveys are showing a growing number of NHS staff are planning to leave the service. This pressure is being compounded by record waiting list times because of the postponement of treatments during the pandemic, which is further increasing work pressure on staff.

“Overworked and stressed staff are more likely to make mistakes, which could lead to more CN [clinical negligence] cases.”

Researchers said that, along with a rebound in case numbers, the number of cases settled in 2021/22 rose as well, though numbers remained “significantly below” the pre-pandemic level.

“During the pandemic there was a huge slowdown in the progress of clinical negligence cases due to a combination of delays in obtaining records, obtaining expert reports, and court backlogs, especially at the Royal Courts of Justice in London.

“For example, there were severe delays with getting hearings and getting documents out of the masters and the legal professional also noticed more cases being defended.”

Having “declined significantly” in 2020, the number of clinical negligence claims handled in the High Court almost doubled in 2021 as “priority was given to higher-value multi-track claims”.

Covid-19 was “not all bad news” for the clinical negligence market, ushering in a “more collaborative atmosphere” between compensators and law firms, with a “collective desire to push cases along as far as possible” given the restrictions imposed by the pandemic.

This more collaborative approach led to the coronavirus clinical negligence claims protocol, developed jointly by Action against Medical Accidents, NHS Resolution and the Society of Clinical Injury Lawyers.

Covid-19 also encouraged more alternative dispute resolution (ADR), providing flexibility to the usual processes.

“ADR is now central to the future plans of public indemnity organisations like NHS Resolution. The advantage of mediation is that it is not restricted by court directions and is also better able to make use of remote technology than a contested legal case.”

NHS Resolution said in its annual report last week that a record 77% of claims were concluded without court proceedings in the last year, but both claimant and defendant legal costs rose.