A recent report reveals a slowdown in the clinical negligence market as the number of firms declines.
The IRN’s 2024 UK clinical negligence report indicates a continuing trend of consolidation in the market, predicting a slowdown in NHS claims settlements for the upcoming year. This slowdown is attributed to a decrease in claims registered two years prior. In the medium-term, however, the number of claims settled is expected to increase as new claims registrations rise.
Significant growth in the clinical negligence market is expected from sectors beyond the NHS, such as care and nursing homes, equipment failures, and malpractice by unregulated practitioners involved in cosmetic and non-intrusive procedures. Legal revenue in the clinical negligence sector for 2023-4 rose by 7.6% to £1.58bn, a substantial increase compared to the previous year’s growth rate of under 2%. Claimant legal fees in NHS cases also saw a significant rise, from £490m to £545m, while defence costs increased from £159m to £169m.
The uncertainty surrounding the implementation of a fixed recoverable cost (FRC) regime for lower value cases—those worth up to £25,000—continues to cast a shadow over the market. Originally set for introduction by the previous government, the policy’s fate remains uncertain under the current Labour government, leaving it potentially postponed indefinitely.
If introduced, the FRC regime might deter some firms from taking on lower value claims, particularly those deemed complex. Regardless of the FRC’s status, the number of claimant law firms is shrinking due to mergers and acquisitions, as well as firms exiting the sector. This trend is anticipated to persist as competition for cases intensifies.
There is a growing emphasis on alternative dispute resolution (ADR) to expedite claim resolutions and relieve pressure on the court system, particularly in birth injury cases, which constitute a significant portion of claim values. The incidence of clinical negligence cases proceeding to court in England and Wales has fallen, dropping from over 29% in 2018/19 to under 19% in 2024.
The pandemic has exacerbated challenges within the NHS, including treatment backlogs and staffing shortages, increasing the likelihood of negligence claims due to patient harm resulting from delays and cancellations. In addition, the potential for legal action concerning negligence involving artificial intelligence in healthcare is drawing nearer, despite AI’s rapid deployment and benefits within the sector.
As the clinical negligence market undergoes consolidation and faces a potential slowdown, firms must navigate an evolving landscape marked by regulatory uncertainties and a shift towards alternative dispute resolution.
