Fixed Recoverable Costs: How Lawyers Can Maintain Profitability and Access to Justice

Fixed Recoverable Costs: How Lawyers Can Maintain Profitability and Access to Justice

With the UK government recently deciding to introduce fixed recoverable costs (FRC) and a new streamlined process for negligence claims(1), the legal landscape of clinical indemnity is set for a big shake-up. Whilst this system aims to drive a number of benefits, this has not stopped concerns amongst the legal profession mounting, mainly around how lawyers can continue to remain profitable when managing those cases that fall within the FRC regime, and the impact this will have on access to justice should these cases no longer be profitable to run.

In this article, we take a deep dive into the potential impact of FRC on law firms currently running clinical negligence cases, before highlighting some of the key ways legal firms can maintain profitability and in turn access to justice, despite the changes.

What are fixed recoverable costs?

The Department of Health and Social Care (DHSC) want to introduce fixed recoverable costs (FRCs) to set a predetermined limit on the legal costs that lawyers can claim back.

In doing so, it is hoped that this will improve the speed at which cases are resolved, due to legal costs being aligned more proportionately to the overall value of compensation. This is estimated to save NHS hospitals £1 billion, and other healthcare providers in the public and private sector £1.3 billion(2).

The reasoning behind this decision has followed the release of the ‘Fixed Recoverable Costs for Lower Value Clinical Negligence Claims’ consultation, published by the DHSC at the start of last year(3).

As a result of the introduction of this cap in England and Wales, lower-value pre-issue clinical negligence cases – with damages values of between £1,501 and £25,0001 – will mainly be impacted moving forward, posing a range of questions from a legal perspective.

What do the updates mean for lawyers?

Whilst originally proposed to come in to place from April 2024 (albeit now more likely to come into force later this year), the DHSC’s proposed changes pose challenges to lawyers in trying to find the balance between justice and profitability – two key elements of working in the legal industry.

In other words, the changes have left some lawyers concerned over how they will be able to continue to stay profitable alongside the introduction of FRCs while, at the same time, still ensuring their clients can access the justice they deserve.

But, this is something the government has taken note of, after responding to complaints from claimant lawyers on the proposed level of costs(4).

Since the results of the consultation were released, the DHSC has said that the updates should help legal costs become ‘more proportionate and predictable’, making ‘an important contribution to controlling rising clinical negligence costs for the NHS’(5).

To navigate this new landscape effectively, however, strategic measures will need to be put into place by law firms acting on behalf of patients. For example, lawyers and legal firms will now need to:

● Enhance early case risk assessment and selection – rather than agreeing to take on every case that comes in, lawyers will need to pick their cases with a clear strategy in mind. In doing so, they will avoid pouring time and money into potentially unprofitable cases. Early use of expert evidence is key.

● Ensure cases move swiftly – lawyers working in the clinical negligence sector have always been under pressure to achieve compensation for their clients as soon as possible, with settlement being directly linked to releasing their profit on cases; should cases take too long to settle, this can impact cash flow and ultimately cause operating difficulties for a firm. With FRC now limiting the amount of profit that can be recovered, lawyers will need to be even more aware of this, working as efficiently as possible to reduce the gap between opening a case and eventual financial settlement, so that the delay in releasing profit is kept to a minimum. Taking steps such as ensuring expert evidence is obtained swiftly, and medical records are managed efficiently, will help reduce unnecessary delays.

● Embrace technological AI advances – artificial intelligence has recently revolutionised clinical indemnity(6) and it could do the same in the legal industry, streamlining workflows by automating admin-based tasks to save time. Whilst the average time (and therefore billable hours and in turn profit) may be cut by the use of AI, the adoption of AI will enable this time to instead be spent on running more cases, with the net result likely to result in improved profitability. With the new technologies already coming to market, such as AI pagination, this presents a novel way to empower lawyers to remain profitable in the FRC regime.

● Budget for success – when taking on cases that fall into the FRC regime, law firms should adopt a cost management model that clearly budgets for available costs so that cases do not accidentally run in the red. Treating the fixed fee as a budget, breaking it into manageable milestones will be a key mindset for any lawyer working in this area, ensuring they allocate a set portion of the fixed fee to each milestone to stay financially disciplined.

While the DHSC’s proposed changes may be seen as a challenge to some, by embracing some of the ideas above, legal firms will be able to remain not only profitable but in control throughout the ongoing transition.

Trust TMLEP to maintain profitability and access to justice

TMLEP has been working with a number of law firms over the past 10 years to develop technologies and professional services to ensure lawyers can easily manage records and radiology, and obtain expert opinion under both time and cost restraints – as a result, the challenges posed by FRC are not new to TMLEP, with solutions already available for immediate deployment to claimant law firms so they can remain profitable, and continue to offer access to justice within the FRC regime.

Below are some examples of TMLEP’s technologies and professional services which would benefit any firm concerned about preserving profitability and access to justice in the looming FRC regime:

● Expert instruction technologies – TMLEP provides an advanced expert instruction platform which takes the hassle out of searching for experts, negotiating fees and turnaround times, and transmitting documentation, so lawyers can reduce time spent on managing experts, and spend more time on what matters - managing the strategy of the case and delivering better results for clients. Request access here.

● AI pagination – by providing a world-first in AI driven sorting and pagination technologies, TMLEP enables firms, counsel and instructed experts to rapidly manage and identify key records. Not only can time be better preserved for legal matters but with services available for fixed fees, costs can be predicted with certainty.

● Early risk assessment – by using our specialist professional services, claimant lawyers can accurately assess the risks associated with each case to help improve whether to take on a new case or not. This then ensures that resources are being invested wisely, mitigating the impact of FRCs by ensuring time is only spent on those cases likely to yield positive results for clients.

● Secure medical records and radiology management software – TitanEMR was developed by TMLEP to enable law firms to easily store, send and manage medical records and radiology. With clear fixed fee pricing, wasted time in respect of managing records becomes a thing of the past, allowing lawyers to focus on specialist legal issues and advising their clients.

● Efficient, robust expert evidence – via TMLEP’s technological platforms, lawyers can obtain access to a suite of experts spanning all medical disciplines, all of which are able to support a case through to conclusion at court. By providing access to leading clinical expertise, this enables lawyers to easily navigate technical issues when bringing a case (such as breach of duty, causation, and even the potential defendants involved). This helps claims to be settled with minimal risk of challenge due to the quality of the case presented, having been prepared with the benefit of TMLEP’s evidence.

As the legal landscape of clinical indemnity starts to embrace FRCs, claimant lawyers can not only weather the storm but with the advantage of our technologies and professional services, thrive.

Having completed over 80,0000 investigations since 2012(7), our team at TMLEP have the expertise required to help you assess clinical negligence cases both quickly and easily. To find out more about working with us, simply give us a call on 020 3355 9796 or email us at [email protected].