Shares in law firm Slater and Gordon have plunged to an all-time low amid fears its UK business could be hurt by possible changes to accident compensation laws in Britain.
About $350 million was wiped off the firm's value on Thursday as its shares plummeted 51 per cent to 94 cents.
The sell-off was sparked by the UK government overnight released a spending review, setting out how STG4 trillion will be allocated over the next five years.
Among the proposals, people injured in road traffic accidents will no longer be able to get cash compensation for minor whiplash injuries.
The UK government says this will make it harder for people to receive compensation for exaggerated or fraudulent claims.
It also proposed that more injuries will be able to go to the small claims court as the upper limit for those claims would be increased from STG1,000 to STG5,000.
The plans rattled investors in Slater and Gordon, which has a significant "fast-track" personal injury business in the UK called Slater Gordon Solutions.
The firm tried to reassure investors on Thursday, saying it doesn't expect any impact from the proposals on the group's performance in fiscal 2016, or on the guidance provided a week ago at its annual general meeting.
The firm will provide further information on the impact, if any, for fiscal 2017 and beyond, after consultations with the UK's Ministry of Justice in the new year.
"Whilst the government's announcement was unexpected, the company believes that the scale and diversity of the Slater Gordon Solutions business in the UK positions it well to deal with the potential impact of any future legislative change," the firm said in a statement.
OptionXpress market analyst Ben Le Brun said investors were wary of any news related to Slater and Gordon's operations in the UK because most of the group's problems seemed to stem from there.
"It just seems that anything in news coming out of the UK that has a slight question mark on it is just going to be absolutely walloped in terms of share price reaction," he said.
Slater and Gordon acquired the Professional Services Division (PSD) from UK insurance claims processor Quindell for $1.2 billion five months ago.
PSD is now known as Slater Gordon Solutions, which Slater and Gordon has hailed as a platform for continued growth in the UK.
At the firm's annual meeting, group managing director Andrew Grech said the UK business had had a slow start to the year but a strong recovery was expected in the second half.
Slater and Gordon has faced some challenging issues this calendar year, including errors in the group's financial accounts related to historical UK cash flows.
At the law firm's annual meeting, Mr Grech acknowledged that Slater and Gordon had work to do to restore investor confidence.
Slater and Gordon's share price was pulled back in August on news that Quindell was being investigated by police and financial regulators.
UK-listed Quindell reported a full year loss of STG375 million ($A795.42 million) for 2014 and revised its previous financial results.
Share
