NHS bill for legal costs flatlines as number of claims hit new record

NHS Resolution reports a complex landscape in clinical negligence claims, with claimant legal costs experiencing a significant increase of 14% in the financial year 2024/25, reaching £621 million, despite a Legal Futures report suggesting costs were static. This rise occurred concurrently with a new record in the number of claims received in 2025/26, highlighting persistent challenges in managing litigation expenses. A critical concern remains the disproportionate nature of legal costs in low-value cases, where average claimant costs continue to exceed damages awarded. The impending full implementation of Fixed Recoverable Costs (FRC) for lower-value clinical negligence claims from October 2024 is anticipated to exert further pressure on cost control and influence claims management strategies.

The landscape of clinical negligence litigation in Great Britain is undergoing significant shifts, as evidenced by recent reports from NHS Resolution. While a Legal Futures report indicated that NHS spending on claimant legal costs was static last year, even as the costs of low-value cases continued to rise sharply and the number of claims hit a new record, a closer examination of NHS Resolution's latest annual reports reveals a more nuanced picture. Specifically, claimant legal costs saw a notable increase in the 2024/25 financial year, challenging the notion of static overall spending. This development, coupled with a record volume of new claims in 2025/26, underscores the persistent financial pressures on the National Health Service and the evolving dynamics of medical negligence claims.

Clinical negligence claims in the UK are governed by a framework of common law principles, establishing a duty of care, breach of that duty, causation of harm, and quantifiable damages. Central to the management of these claims against the NHS in England is NHS Resolution, an arm's-length body of the Department of Health and Social Care, responsible for providing indemnity and handling disputes. The procedural aspects of litigation, including the recovery and assessment of costs, are primarily dictated by the Civil Procedure Rules (CPR), particularly Part 44 (General Rules about Costs), Part 45 (Fixed Costs), and Part 36 (Offers to Settle).

Historically, NHS litigation costs have been a growing concern, with total liabilities for medical negligence reaching substantial figures. In response to these escalating costs, particularly in lower-value claims where legal fees often disproportionately outweigh damages, the government has introduced reforms. A significant development is the extension of the Fixed Recoverable Costs (FRC) regime. While a broader FRC scheme for most civil claims up to £100,000 came into force in October 2023, a specific FRC scheme for lower-value clinical negligence claims (those with a damages value between £1,501 and £25,000) was initially planned for April 2024 and subsequently confirmed for implementation in October 2024 for pre-issue claims. This targeted reform aims to ensure that legal costs are proportionate to the compensation awarded, thereby reducing the financial burden on the NHS.

Despite the Legal Futures report's assertion of static claimant legal costs, NHS Resolution's annual reports present a more dynamic trend. In the financial year 2022/23, claimant legal costs amounted to £490.9 million, an increase from £470.9 million in the preceding year, with new clinical negligence claims rising by 8.6% to 13,511. The trend of increasing costs continued into 2023/24, where average claimant legal costs for clinical claims closed with damages between £25,000 and £100,000 increased by 5% to £54,978. More critically, for claims valued up to £25,000, average claimant costs rose by 7% to £26,095, surpassing the highest damages awarded in this category.

The most recent data for 2024/25 further clarifies this picture, showing a significant 14% jump in overall claimant legal costs to £621 million, with NHS's own legal costs also increasing by 7% to £181 million. The number of new clinical negligence claims and reported incidents also reached a new record of 14,428 in 2024/25, an increase of 5% from the previous year, with 2025/26 seeing a further increase to 15,236 new claims. This demonstrates that while efforts are being made to control costs, the overall expenditure on claimant legal fees is not static but rather on an upward trajectory, albeit potentially at a rate that NHS Resolution is actively trying to manage.

A key driver behind the concern for disproportionate costs, particularly in low-value cases, is highlighted by the National Audit Office (NAO) report, which found that in 2024/25, claimant and NHS legal costs for low-value claims were 3.7 times higher than the damages awarded. This stark imbalance is precisely what the Fixed Recoverable Costs (FRC) regime, set to fully apply to lower-value clinical negligence claims from October 2024, aims to address. By capping recoverable legal costs, the FRC regime is expected to force greater efficiency and proportionality in the handling of these claims, potentially altering the financial dynamics for both claimants and defendants.

NHS Resolution's strategic approach, termed 'Resolution Through Collaboration,' has focused on early intervention and alternative dispute resolution (ADR) methods, such as mediation and resolution summits, to keep cases out of formal litigation. This strategy has yielded considerable success, with a record 83% of clinical claims resolved without recourse to litigation in 2024/25, rising to 84% in 2025/26. While this approach helps to contain overall litigation costs and distress, the persistent rise in claimant legal costs, even with a high rate of early resolution, suggests that the complexity and inherent costs of even non-litigated claims remain substantial. Furthermore, a small number of very high-value claims, particularly in obstetrics, continue to disproportionately drive the overall cost and liability for the NHS. Recent Supreme Court rulings, such as *CCC v Sheffield Teaching Hospitals NHSFT* [2026] UKSC, concerning 'lost years' damages, also underscore the potential for significant financial implications in catastrophic injury claims.

The current landscape of NHS clinical negligence claims is characterised by a tension between increasing claim volumes and ongoing efforts to control legal costs. While NHS Resolution has achieved commendable success in resolving a high percentage of claims outside formal litigation, the latest data indicates a significant increase in overall claimant legal costs, particularly for 2024/25. The disproportionate nature of legal fees in low-value claims remains a critical concern, driving the need for reforms such as the Fixed Recoverable Costs (FRC) regime for clinical negligence, which is set to take full effect from October 2024.

For legal practitioners, this evolving environment necessitates a keen awareness of the FRC rules and a continued emphasis on efficient case management and early dispute resolution. Claimant solicitors will need to adapt their fee structures and processes to operate effectively within the new cost caps for lower-value cases, while defendant solicitors, representing the NHS, will continue to leverage strategies that promote early settlement and avoid costly litigation. The ongoing focus on patient safety, particularly in high-risk areas like maternity care, remains paramount, as reducing harm is ultimately the most effective way to mitigate the financial and human costs of clinical negligence. Practitioners should closely monitor the impact of the FRC implementation and any further policy changes aimed at reforming the compensation system.