Slater and Gordon shares have recovered some of their lost ground after the law firm moved to reassure investors following huge falls in its stock price last week.
The law firm sparked some much-needed cheer among investors by reaffirming its financial guidance for fiscal 2016 and saying it remained compliant with its debt obligations, pushing the share price up more than 30 per cent.
The stock plummeted late last week after news that a UK government spending review had proposed denying cash compensation to people who sustain minor whiplash injuries in car accidents.
The company has a significant "fast track" personal injury law business, Slater Gordon Solutions (SGS), in the UK.
The Slater and Gordon Lawyers (SGL) business in the UK also deals with personal injury law - but more complex matters - as well as general law.
The sell-off resulted in Slater and Gordon shares losing 51 per cent of their value last Thursday and another 27 per cent on Friday.
But the stock staged a partial recovery on Monday after group managing director Andrew Grech said the UK proposals wouldn't have any impact on the SGL business in Australia, nor have a material effect on the SGL business in the UK.
"It is also important to note that the proposals (even if enacted in their current form) do not eliminate the right to claim compensation, or the opportunity for people injured in road traffic accidents to obtain advice and assistance with the claims process," Mr Grech said in a statement.
The impact of the proposed changes on SGS could not yet be reliably estimated, he said.
Shares in Slater and Gordon closed 23.5 cents higher at 92.5 cents.
The UK government won't start a consultation process until January 2016, and the earliest implementation date will likely be April 2017.
"SGS is well positioned to continue to be a leading provider of services to people who require legal and other assistance as a result of road traffic accidents in the UK in the 2017 financial year and beyond," Mr Grech said.
CMC Markets chief market strategist Michael McCarthy was surprised by the reversal in direction of Slater and Gordon's shares.
He said investors could be covering short positions.
"I'm not sure that it's a reaction to the statement itself. It could just be a reaction to the extreme lows that the share price has hit," Mr McCarthy said.
In April this year Slater and Gordon shares were around the $8.00 mark, but have slumped to one tenth of that.
Mr McCarthy said investors remained concerned about Slater and Gordon's acquisition of UK insurance claims processor Quindell's Professional Services Division (PSD) - now called Slater Gordon Solutions - for $1.2 billion in May 2015.
Questions have been raised over the accounting policies of Quindell.
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