(Bloomberg) -- Slater & Gordon Ltd. lost half its value in Sydney trading after the U.K. announced proposals to change the legal rights of people injured in car accidents.
The law firm’s shares tumbled 51 percent to 94 Australian cents on record high volume. Chancellor of the Exchequer George Osborne announced measures on Wednesday to tackle questionable whiplash claims, including removing the right to general damages for minor soft-tissue injuries from a car accident. He also plans to cut legal costs by transferring personal injury claims of as much as 5,000 pounds ($7,560) to the small claims court.
Slater & Gordon doesn’t expect the proposals will affect its earnings in the 2016 financial year, it said in a regulatory filing Thursday. The company has 3,800 employees in the U.K., more than twice as many as in Australia, according to its website.
“People are taking a cautious, worst-case approach,” said Gareth James, a Sydney-based analyst at Morningstar Inc. “There’s a lot of concern around exactly what the earnings are going to be in their U.K. business.”
Thursday’s plunge extended Slater & Gordon’s slide this year to 84 percent.
The firm said in June that it had misreported U.K. cash flows and was responding to queries from Australia’s market regulator over its audit process. Investor concern that it paid too much for Quindell Plc’s personal services division also has weighed on the shares. Slater & Gordon announced the 637 million pound acquisition in April, saying it would create “the number- one personal injury law group in the U.K." In June, the U.K. regulator said it was probing Quindell’s accounting policies.