“No win, no fee” system is proving costly to NHS, report says

BMJ 2012; 344 doi: (Published 31 January 2012) Cite this as: BMJ 2012;344:e777
  1. Clare Dyer
  1. 1BMJ

Around half the £195m (€233m; $306m) legal costs that the NHS in England paid out in 2010-11 for claimants who won clinical negligence cases went on “no win, no fee” lawyers’ success fees and refunds of premiums paid by claimants to insure against the cost of losing, calculations by the Ministry of Justice indicate.

The figures are based on a sample of cases that found that success fees accounted for 34% of claimants’ legal costs paid by the NHS and so called “after the event” insurance premiums for 17%.

If the figures for the sample are representative of cases in general—which the ministry said it could not guarantee, nor could it say how large the sample was—lawyers’ success fees, paid on top of their normal fees, could be costing the NHS as much as £66m a year.

The number of claims launched against the NHS rose from 5426 in 2006-7 to 8655 in 2010-11. Over the same period the legal costs paid on behalf of successful claimants went up from £83m to £195m.

Under current rules the loser—in this case, the NHS Litigation Authority, which handles negligence claims for the NHS—pays the winner’s legal costs. But claimants’ lawyers who take cases on a no win, no fee basis are entitled to a success fee, also payable by the authority, to compensate them for the risk of losing and getting nothing. The authority is also liable for the insurance premium taken out by successful claimants to cover the risk of having to pay the authority’s costs should they lose.

The ministry has produced the figures as the Legal Aid, Sentencing and Punishment of Offenders Bill, which will radically reform the system, resumes its committee stage in the House of Lords. Under the bill the NHS will no longer be liable for success fees, which claimants will have to find in future from their own compensation. Damages for pain, suffering, and loss of amenity will be increased by 10% as a result.

The NHS will also no longer have to pick up the bill for “after the event” insurance, which will be unnecessary, as the reforms also provide that the losing claimant will no longer have to pay the NHS’s costs. Insurance will remain only to cover the cost of obtaining experts’ reports before deciding whether to launch a claim, and the NHS will still have to refund that premium in successful cases.

The government faces a fight over provisions in the bill removing legal aid from a swathe of civil claims, including clinical negligence. The former Conservative cabinet ministers Norman Tebbit and Tony Newton, joined by the former NHS chief executive Nigel Crisp, are sponsoring an amendment that would retain legal aid for children suing over clinical negligence.

An independent report from King’s College London, commissioned by the Law Society, argues that scrapping aid for clinical negligence would cost three times as much as it saved and produce a net loss of £18m (BMJ 2012;344:e380, 13 Jan, doi:10.1136/bmj.e380).


Cite this as: BMJ 2012;344:e777