Reading Is not understanding: Why informed consent Is essential to protect costs recovery from your client

There is a dangerous assumption which is still very much embedded in law firms that if the client signed the documents, they must have understood them.

Senior Costs Judge Rowley has reiterated in his 14/01/26 judgment Perrett -v Wolferstans LLP [1] that this can be flawed and very costly assumption.

Courts are no longer asking simply “what was written?”, i.e. what contractually exists between solicitor and client, they are asking a far more uncomfortable question:
“did the client understand what it was they were agreeing to?”

Firms with technically compliant documentation will still find themselves exposed, not because the paperwork was lacking, but because quite simply reading does not equal understanding.

Given that the average reading age of 1 in 6 adults in the UK have literacy levels equivalent to that of a 5-7 year old[2] this is hardly surprising given that legal documentation is often lengthy, confusing and jargonistic.  This is before a client argues a real and specific vulnerability that impacts on their ability to digest the content and intent of such lengthy documents.

However, as client understanding is central to the enforcement of the contract such omissions will weigh heavily against the solicitor, even where the signed documents do exist.

An illusion of safety: “They read it”

In the words widely attributed to George Bernard Shaw, “The single biggest problem in communication is the illusion that it has taken place”.  One of the most striking themes in recent cases is that whilst clients confirm they did read the paperwork they have clearly still not understood it.

Judges have acknowledged that:

• Clients are laypeople, not lawyers
• Legal language is inherently misleading or inadequately explained, particularly around “no win – no fee” agreements
• Confirmation forms and tick-box exercises do not add anything to the test of understanding

Costs Judge Rowley (now Senior Costs Judge) in his first judgment in the Perrett -v- Wolferstans[3] dispute described a “confirmation of advice given” document as effectively “pointless” as it provided “no such thing” concluding that the client would either understand the CFA from its own terms or “as it now appears, did not understand it at all” [29].

Judicial guidance returns time and again to what has been described as the “golden rule”[4] as set out by Mr Justice Constable in St James -v- Wilkin Chapman LLP “the client should be kept informed” [68]

For example, a failure to explain that fixed recoverable costs may be dramatically lower than incurred costs and that the client is contractually obligated (assuming your contract has a “shortfall provision”) for the entirety of the legal fees or that a 25% deduction from damages is likely, repeatedly triggers criticism and adverse presumptions in the Courts is not complying with that golden rule.

Whilst the Courts have accepted that clearly stating a maximum liability (for example, a 25% cap) is important and this has in some cases, as it was in this one, been enough to defeat a challenge, it is clear that public perception has not kept up with the changes in the legal marketplace. The fact that success fees or ATE premiums, and in the case of Fixed Costs their Solicitor’s actual costs, are no longer recoverable from the losing party is frequently not understood by clients.

A capped limits exposure does not by itself create understanding. The problem is not that firms charge these costs,the problem is that clients do not understand that they are liable for them until it is too late.

However SCJ Rowley did conclude in this judgment[5] as follows:

“I have previously found that Mr Perrett understood the terms of the agreement regarding a 25% deduction and was aware of them when he signed the confirmation for his solicitors to accept the damages offered. It would obviously have been preferable if Mr Perrett had grasped more of the detail of the agreement, but that is no criticism to be levied at the defendant’s contractual documentation.[25]”

This being a clear indication that it would be “preferable” for clients to grasp more detail. And while lack of understanding may not always invalidate a retainer, it does create fertile ground for disputes, complaints, and reputational damage – all of which is costly (pardon the pun) to both parties.

This is where firms, in my opinion, make the common mistake of miscalculating their risk. Rather than focus on whether they can defend a claim they should be seeking to avoid a dispute completely by being open and transparent about their charges from the outset and throughout.

This is precisely why The Legal Lexi was developed.

We help firms to stress-test informed consent beyond the written word and highlight where understanding is weak, aligning compliance with commercial protection.

The future of costs disputes will not turn on whether the client read the documents but on whether the solicitor can prove the client understood them.

[1] [2026] EWHC 50 (SCCO)

[2] OECD Survey of Adult Skills aka “PIAAC (Programme for the International Assessment of Adult Competencies”

[3] [1] [2025] EWHC 68 (SCCO)

[4] [2024] EWHC 1716 (KB)

[5] [2026] EWHC 50 (SCCO)

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