Changes to "no win, no fee" arrangements will be at the heart of a shake-up of civil justice in England and Wales being announced later.
Justice Secretary Ken Clarke told the BBC he favoured a system where lawyers received a share of the damages, rather than an additional "success fee".
In 2008-9 the NHS paid out £312m in damages but £456m in legal costs, he pointed out.
The change follows a review carried out by Lord Justice Jackson in 2010.
Lord Justice Jackson's review of the system said lawyers in "no-win, no-fee" civil cases should no longer have a "success fee" which has to be paid by the defendants, but should get a share of damages.
The judge found huge rises in civil litigation costs in England and Wales in recent years and said reforms could save people millions.
According to the BBC's legal correspondent, Clive Coleman, critics say the scheme can encourage unscrupulous lawyers to take frivolous accusations to court.
He said the plan was to increase the amount of damages across the board by 10% to offset the loss of the "success fee".
Mr Clarke told the Today programme Lord Justice Jackson's report was "on his desk" when he took over from Jack Straw after the election last year.
He said: "If you say to someone 'you should go to a lawyer' they tend to go pale, not because they fear lawyers, but because they know there are a great deal of costs involved and they are daunted by our legal system."
Mr Clarke said legal costs should be "reasonable" but they should also be high enough that people treat going to court as a "last resort".
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