Clinical negligence cases generated over £1.1bn in legal revenue in 2019/20, although failed conditional fee cases cost claimant firms around £320m, according to research.
It also found that the number of clinical negligence cases is collapsing because the virus has made it difficult for lawyers to investigate cases.
IRN Research said the number of cases registered with the Compensation Recovery Unit has declined since a peak in 2013/14 at 18,499 but had declined steadily since then and now faced a “sharp drop” to just over 12,000 in 2020/21.
“It is likely that many incidents in 2020/21 that may lead to claims have yet to do so because of the problems of arranging face-to-face consultations between claimants and medical report writers and law firms and because of the slowdown of legal proceedings in courts.
“The number of cases settled, therefore, is likely to have been affected. These influences may wane during 2021, so the 2020/21 drop could be temporary. However, the underlying decline in case numbers is likely to continue.”
IRN estimated in its Clinical Negligence 2020 Market Report , that legal revenue was over £1.1bn in fees from clinical negligence cases, an annual rise of 8.8%. Around a fifth of this went to defendant firms and medical defence organisations.
It calculated the costs of running unsuccessful ‘no win, no fee’ claims at around £320m, meaning in 2019/20 law firms earned an estimated net £783m.
North-West firm Fletchers handled the most claims, although Irwin Mitchell was close behind and dealt with far bigger cases too when judged by value.
Researchers said while the share of cases that end in damages being paid had not changed significantly in recent years, there was a trend for average award sizes to get larger.
“Data from NHS Resolution shows that in 2019/20, 37% of claims were up to £25,000 in value and this compares with 51% in 2013/14.
“In part, this rise reflects the continuing importance of obstetric claims in terms of the cost of clinical negligence cases across the UK.”
The government has long been expected to launch a consultation on introducing fixed recoverable costs in clinical negligence cases for cases worth up to £25,000, though the timing has still to be announced.
A year ago, a working group set up by the Civil Justice Council failed to agree on the level of fixed costs  for such claims.
IRN said the rate of growth in spending on clinical negligence claims had “significantly slowed in recent years, mainly reflecting the growing trend to make periodic payments rather than lump sum payments”.
If fixed costs for cases worth up to £25,000 were introduced, researchers predicted that this would cut the annual growth rate further.
“Another factor complicating the picture is Covid-19. On the one hand, the drop-in hospital appointments and GP visits in 2020 could cut the number of clin neg cases in the next few years.
“On the other hand, it is not clear how delays for serious conditions like cancer could lead to clin neg cases against NHS trusts and health boards in the future.”
IRN concluded that while annual expenditure on clinical neg cases seemed to be coming down, there remained “a large number of cases outstanding, with the indemnity schemes having to hold huge provisions to deal with these cases over time”.
Researchers said data from NHS Resolution, currently holding £84bn to deal with future cases, indicated the “huge financial sums” involved.
NHS Resolution accounts showed that in 2019/20 alone new claims received carried a potential financial cost of £5bn, with existing cases and claims in the pipeline carrying a potential cost of £4.4bn.