Lawyers earned more than £800 million from NHS clinical negligence claims in 2024–25, according to NHS Resolution figures, as total compensation costs climbed to a record £3.1bn. The Medical Defence Union (MDU) has urged Chancellor Rachel Reeves to intervene, warning that legal fees have reached unsustainable levels and are draining resources from frontline care.
The MDU has written to Reeves calling for legal fee caps on lower-value claims, arguing that capping costs could save £50–£60m a year and help protect NHS budgets. Reeves is expected to prioritise NHS funding in her upcoming Budget as she works to address a £30bn fiscal gap.
Concerns NHS Is ‘Paying Twice’
The MDU also raised concern that the NHS sometimes pays damages to successful claimants who later receive further NHS care. Most legal fees arise from “no win, no fee” cases, where the NHS must pay both compensation and the claimant’s legal costs, as well as its own defence fees.
Huge Fees on Small Claims
The National Audit Office reports that for claims worth up to £25,000, claimant lawyers receive four times more than the patients themselves. Last year, the NHS paid £181.3m for its own legal representation and £620.9m for claimant legal fees.
Reform Delayed Again
The previous Conservative government planned a Fixed Recoverable Costs (FRC) system to cap legal fees. Its introduction, scheduled for April 2024, was delayed due to “outstanding issues” and has not yet been implemented.
Government Adviser Completes Review
David Lock KC, appointed to review legal costs, has submitted his findings. The MDU says the system is “not fit for purpose” and wants fee caps on claims up to £250,000, arguing they would bring significant long-term savings.
Calls to Scrap 1948 Law
The MDU also wants a repeal of part of the 1948 Law Reform (Personal Injuries) Act, which forces courts to calculate damages based on private healthcare costs rather than NHS care. The union says this outdated rule means the NHS sometimes pays compensation at private-sector prices and then provides treatment on top.
MPs Investigate Rising Costs
The Public Accounts Committee is examining why legal costs continue to rise. The Association of Personal Injury Lawyers argues that the money reflects the cost of avoidable harm and says most compensation goes to severely injured patients needing lifelong care.
Government Vows Action
The Department of Health and Social Care said it is concerned about rising negligence costs and has asked Lock KC for advice on improving the system. Ministers said patient safety is central to their 10-Year Health Plan. The Treasury has been asked for comment.
