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Objectives To identify trends in the incidence and cost of clinical negligence claims. To determine the current annual cost to the NHS as a whole in terms of cash paid out to patients and their solicitors and the defence costs incurred. Design Analysis of records on database. Setting A well defined group of hospitals within one health authority which collected information on a consistent basis over many years. Main outcome measures Data on individual claims. Trends in incidence of claims and costs identified independently from organisational reforms and changes in accounting practices. Results The rate of litigation increased from 0.46 to 0.81 closed claims per 1000 finished consultant episodes between 1990 and 1998. Overall expenditure on clinical negligence by the NHS in England in 1998 was estimated at £84 million (95% confidence interval £48 million to £130 million). Conclusions After adjustment for hospital activity, the rate of closed claims increased during the 1990s by about 7% per annum, a substantial rate of growth but not the uncontrolled explosion sometimes alluded to in the wider media. More coordination and openness are needed in data collection.