Honesty is always the best (and sometimes the cheapest) policy.

It’s common for clients to believe that their opponents are deliberately exaggerating their position.
How confident they are of their case.
How much their legal fees will be, which they maintain you’ll have to pay “when” they win.
How serious they are about issuing proceedings.
Etc, etc, etc.
Often these allegations turn out to be exaggerated, and the other side will want to retaliate – they might argue that the other party, or even possibly their solicitors have lied or been deceptive about their case, their costs or their determination, and that there should be consequences.
Usually, the answer is no – there is nothing wrong with a bit of posturing and if you choose to take them more seriously than you should have done, then you have to take some responsibility. What’s more, threats of legal action and claims to recover costs are often nothing more than negotiations, and so long as what is being said could be true, then whether you choose to believe them or not is up to you.
However, where a party significantly exaggerating their damages in the course of proceedings can sometimes be actionable.
Nevertheless, as solicitors, we always caution our clients not to raise allegations of fraud unless we are completely certain that not only is it true, but that we can prove it. Simply because you think that the other side are gilding the lily, doesn’t mean that they are. What’s more, fraud is one of those allegations that if you can’t prove, it can backfire on you. As a Defendant in a personal injury case found out recently to their detriment. Although they were able to defeat the claim, their allegations of fraud were not upheld, and so they were penalised on costs. So what could have been a complete success, ended up in a partial loss, only because the Defendant insisted on alleging fraud, without any or any sufficient evidence in support.
So the moral of this story is, if your solicitor is telling you not to take the other side’s threats too seriously, they probably know what they’re talking about.
Kleyman & Co Solicitors. The full service law firm. Trust us.