Slater & Gordon has reaffirmed its financial-year guidance, but investors continue to desert the Australian law firm in droves following the announcement last week that the UK proposes removing the right to obtain general damages for minor traffic whiplash injuries.

Group MD Andrew Grech insists the proposal will have no “material impact” on the law firm’s UK business, “given practice diversity and the profile of clients”.

This confidence is not shared by investors.

Slater & Gordon’s share price copped a 51% drop last Thursday and a 27% hit on Friday, closing for the week at 69 cents, compared with its April high of $8.

UK Chancellor of the Exchequer George Osborne announced in his autumn statement last week that cash compensation for minor whiplash claims would be abolished and personal injury claims of up to £5000 ($10,442) transferred to the small claims court. The threshold is currently £1000 ($2088).

The Government wants to end “the compensation culture around minor motor accident injuries” and the payment of compensation “out of all proportion to any genuine injury suffered”.

It estimates whiplash claims cost UK insurers £2 billion ($4.18 billion) a year, an average of £90 ($187.97) per motor insurance policy.

“This will remove more than £1 billion ($2.09 billion) from the cost of providing motor insurance,” Mr Osborne said. “We expect the industry to pass on this saving, so motorists [will] see an average saving of £40-50 ($83.54-$104.43) per year off their insurance bills.”

Mr Grech says Slater & Gordon is unfazed by the proposed laws.

“Throughout our 80-year history the company has gained unique experience in responding to regulatory changes when they occur,” he said. “This is what we will do in the UK. Our growth has in no small part been enabled by the consolidating drive of regulatory reform.”

The UK Government has announced a consultation starting in January.

“Given that the consultation process is yet to begin, it would be premature for the company to provide financial guidance post-2015/16, and it will not do so until details of the final form of any changes are released by the UK Government,” Mr Grech said.