Assumptions, Informed Consent and Legal Risk: Why Clarity Matters in Commercial Legal Advice

When businesses seek legal advice whether for commercial disputes, debt recovery, contract interpretation, or litigation strategy they rely on accuracy, clarity and transparency. One of the most common risks in early-stage legal advice is the use of unsupported assumptions. While assumptions are sometimes unavoidable, they must be handled with care.

Choosing evidence over assumptions protects businesses from legal risks.

Recently, a client approached Bane Legal Services after an initial consultation with another lawyer who was making wildly inaccurate assumptions about the process of litigation. The client had asked for a point of clarification as the lawyer's responses were vastly different from the practical experience of the client. When challenged on the assumptions being made, the lawyer prevaricated and threatened to "start the clock" because they had now entered "legal advice" territory. It was obvious that the junior lawyer was out of their depth, unresearched and had merely tried to bluff the room.

Understanding how assumptions operate in legal advice is essential for making informed decisions.

Why Lawyers Sometimes Need to Rely on Assumptions

In commercial matters, lawyers often provide initial guidance before every document or piece of evidence is available. In these situations, assumptions may help frame early advice but only when used properly.

A responsible lawyer must:

• Clearly state any assumptions relied upon

• Explain how those assumptions shape the advice

• Ensure the client understands the limitations created by those assumptions

This is the foundation of informed consent, the client’s ability to make decisions based on clear, qualified and transparent advice.

Informed Consent: The Client Must Understand the Limits of Early Advice

Good legal practice requires more than providing information. It requires checking that the client understands:

• What assumptions underpin the advice

• Why those assumptions have been made

• The risks of acting on preliminary information

• The commercial and legal consequences of uncertainty

While clients make the final decisions, lawyers must empower them with accurate, comprehensible advice. This is particularly important in matters such as debt recovery, commercial litigation, contract breaches and disputes where early strategic decisions can significantly affect outcomes.

The Risks of Making Unsupported or Incorrect Assumptions

Incorrect assumptions create serious legal, financial and strategic risks. These include:

1. Poor Client Decision-Making

A client may rely on early advice to make commercial moves, negotiate, settle, commence proceedings or decline to act. If the advice was based on a wrong assumption, the resulting decision could be damaging.

2. Professional Negligence and Liability

Hidden, unclear or unjustified assumptions expose the lawyer to professional liability. Failing to verify information or disclose uncertainties can be treated as negligence.

3. Litigation Failures

Unsupported assumptions can weaken or destroy a case. For example:

• Expert reports may be ruled inadmissible

• Key arguments may collapse under scrutiny

• Claims may be dismissed

• Courts may criticise the party for relying on speculation instead of evidence

Judges expect evidence not guesswork.

Best Practice: Evidence First, Assumptions Second

At Bane Legal Services, we uphold best-practice standards to protect clients and the lawyers we refer them to:

• Gather evidence early.

• Avoid assumptions unless necessary.

• Where assumptions are required, express them clearly.

• Confirm that the client understands the basis of the advice.

• Review and update the advice as more information emerges.

Transparent communication ensures strong client relationships and reduces the risk of disputes, negligence claims and litigation setbacks.

Need Strategic Legal Support?

Bane Legal Services is not a law firm. We are a trusted intermediary connecting Australian businesses with vetted commercial lawyers, litigators and debt recovery specialists. We ensure that we refer lawyers who provide advice that is clear, evidence-based and commercially responsible.

If you need support with:

• Commercial disputes

• Unpaid debts

• Litigation or enforcement

• Contractual interpretations

• Risk identification and mitigation

We can connect you with experienced lawyers who provide clear, commercially sound legal advice.

Bane Legal Services Disclaimer

Bane Legal Services is not a law firm and does not provide legal advice. We provide strategic legal referral services, connecting clients with qualified and experienced lawyers based on their commercial needs. The information contained in this article is for general informational purposes only and should not be relied upon as legal advice. You should obtain independent legal advice tailored to your specific circumstances before making any decisions. Bane Legal Services does not accept responsibility for any loss arising from reliance on the information provided.