The National Audit Office (NAO) has urged NHS Resolution (NHSR) and the Department of Health and Social Care (DHSC) to investigate how much claimant lawyers deduct from clients’ compensation in clinical negligence cases. The recommendation forms part of a wider call to control NHS Negligence Legal Costs, which the watchdog says are diverting billions from frontline healthcare.

A growing cost burden for the NHS

According to the NAO, the total cost of claims for clinical negligence has continued to increase, reaching an estimated £3.6 billion in 2024-25. The rise stems both from a greater number of claims and higher sums awarded to claimants, particularly in complex, long-term cases. The largest claims now account for most spending despite representing a small proportion of overall cases.

Claimant legal costs have risen sharply over the past two decades, from £148 million in 2006-07 to £530 million in 2024-25, while the NHS’s own legal spending has grown far more slowly. The NAO said this imbalance highlights the need for better oversight and transparency.

Gareth Davies, head of the NAO, stressed that preventing harm should remain the first line of defence:

“Reducing harm to patients is clearly the best way of containing this cost. Alongside this, DHSC should consider whether the existing approach to legal costs remains proportionate for all claims.”

Government response and the focus on maternity care

The Department of Health has accepted the findings and commissioned David Lock KC to advise ministers on reform options. The department said it will develop a policy to manage legal spending and improve the claims process so that it works better for patients and the public purse.

A major driver of high expenditure is maternity care, where lifelong support needs can push settlements into the millions. The current government’s 10-year health and social care plan identified safer maternity services and efforts to improve patient safety as key to reducing both harm and costs. Addressing avoidable injuries in maternity units could significantly cut future liabilities and help stabilise NHS Negligence Legal Costs.

Understanding the constant rise in costs

While NHS Resolution has made progress in resolving cases more efficiently, with over 80% now concluded without litigation, overall costs have still risen. The watchdog noted that official data excluded additional fees sometimes charged for damages and the costs of unsuccessful cases, making it difficult to assess the full picture.

The public accounts committee warned that legal bills can exceed awards in low-value claims, while claimant representatives argue that delays caused by the NHS itself often inflate costs. The social care DHSC oversees adds further complexity, as growing patient needs increase the size of compensation awards. Broader economic factors and stricter expert-evidence standards have also raised fees.

Stakeholders agree that more detailed data is needed. The NAO recommended that NHSR consider voluntary transparency from firms, or if necessary, collect anonymised data on fees to better understand trends in settling clinical negligence claims.

Using data and technology to manage future claims

The NAO also highlighted how technology can help contain the costs of clinical negligence. It encourages NHSR to expand its use of analytics and AI to spot inefficiencies, forecast liabilities, and target the areas where claims are most expensive to process. Smarter analysis could shorten timelines to settle claims and reduce expert-witness expenditure, saving money without limiting access to justice.

At the same time, the NAO urged the system to focus on the root cause: preventing harm. Fewer incidents of clinical negligence in England mean fewer claims, less distress for patients and a sustainable reduction in NHS Negligence Legal Costs over time.

Expert Support from Greener Costs

The discussion around legal fees and compensation highlights how essential effective cost management has become across healthcare litigation. As the DHSC and NHSR seek to manage the costs of claims more tightly, expert assistance can make a measurable difference.

At Greener Costs, we help law firms, insurers and public bodies prepare, analyse and negotiate detailed bills in clinical negligence claim work. Our experienced team ensures that costs are transparent, proportionate and compliant with regulatory standards. From early budgeting to post-settlement reviews, we support clients through every stage of the process.

As reforms evolve and scrutiny of NHS negligence legal costs increases, our expertise helps organisations remain efficient, fair and accountable. Through precision, data-driven insight and collaboration, Greener Costs enables firms to meet the twin goals of cost control and justice for patients.

To discuss how we can assist your firm with cost management or legal cost recovery, please contact Greener Costs for tailored expert support.