From April 2024, the government is set to introduce limits on the amount law firms can receive from clinical negligence claims. This cap on fixed recoverable legal costs is intended to stem the almost £2.6 billion the NHS spends on clinical negligence by reducing legal costs for cases that settle under £25,000. It is the government’s stance that a cap on clinical negligence costs will not only save the beleaguered health service an estimated £500 million over the next decade but that it will be fairer for claimants – whose legal costs are often more than double their settlements – and encourage those with smaller claims to seek justice.

However, legal firms and clinical negligence lawyers argue that the sweeping changes have been brought in too quickly and with little consultation, and that the Department of Health and Social Care has set the cap on clinical negligence costs too low, undervaluing the expertise it takes to bring these claims to court. Something the government seems to agree on, as they are set to increase the limit before the new regulations are enforced.

Representatives for patients have also protested, saying that vulnerable claimants and their families could be excluded from bringing claims as firms refuse to take on work that require more time, expertise, and sensitivity than the value of the claim reflects.

How This Will Affect the Legal Market

On the face of things, the new limits on clinical negligence fixed costs shouldn’t have too much of an impact, especially for large firms since they are limited to small claims with a value of under £25,000. However, in the longer term the cap on costs could cause upheaval for smaller firms and clinical negligence departments. Unless the government can get the limits on clinical negligence costs right, we could see:

• An exit of smaller more specialised firms from the market, funnelling customers to larger businesses who may not have the time or inclination to take on small claims.
• Greater competition amongst firms for claims with the potential for larger payouts.
• A rise in class-action claims as firms group claimants together to maximise resources and returns.
• The potential for larger numbers of specialist lawyers to enter the job market, which could prove beneficial for employers who are looking to access key skills but will lead to greater competition among candidates for fewer roles.
• The profession will experience a loss of critical knowledge and expertise as departments contract and firms exit the market.

What It Means For You

With less than two months before the limits on clinical negligence costs come into effect, are you ready for the changes? There will be more competition for claims, and smaller gains from cases. In terms of your wider business growth, now is the time for careful consideration of your strategy.

1. Think ahead with your workforce planning

Effective workforce planning will help you navigate business changes. Succession planning helps you understand who may be leaving and allows for strategic skill replacement, whether through internal transfers or external hires. In times of downsizing, retaining key skills through cross-departmental moves prevents talent loss. Adjusting recruitment processes to focus on quality over quantity is essential, safeguarding against low-quality hires and ensuring resilient teams.

2. Consider training and professional development

While the influx of specialist legal talent onto the job market could prove tempting especially during a skills shortage, it can be a costly strategy. Instead, investing in developing existing teams is often more sustainable. Focus on enhancing soft skills, digital capabilities, and leadership within your current teams. This approach not only maximizes resources but ensures a cohesive team with a deep understanding of your company’s culture and goals.

3. Double down on retention

With smaller teams managing increased workloads, maintaining a strong, committed workforce is crucial. A focus on employee wellbeing and creating a positive work environment prevents burnout and preserves morale, reducing the risk of team members seeking alternative career paths. As competition for top talent intensifies, retention becomes a safeguard against poaching and ensures continuity in your teams, important for both your business and your clients.

Clayton Legal has over 20 years’ experience helping clients attract and retain legal talent across practice areas that include Property, Personal Injury, Family, Criminal, and Costs law as well as Legal IT and Civil and Commercial Litigation.

If you are building your legal team, we can help. Call us on 01772 259 121 or email us here.