As criticism of the quality of Virgin Trains' West Coast Network and cross-country service increases, so does government pressure on the company to meet its obligations and renew its ageing rolling stock.

This has led to an influx of work for asset finance lawyers.

One particular deal has kept Virgin's in-house and outside counsel busy. Last March, the company ordered 78 diesel trains from Bombardier Transportation of Canada and a raft of advanced tilting trains from Fiat-Alstrom, an Italian-UK joint venture.

The two deals are jointly worth about £1bn, the largest ever private sector train deal.

The first deal – for the diesel trains – closed on 10 December, while the other is set to complete in the next month or two, having been delayed by last minute wrangling over the final price.

In all, seven City firms have advised on the deals. Freshfields' asset finance star Andrew Littlejohn played a pivotal role advising Angel Trains, which is leasing the trains to Virgin, on both deals.

Virgin instructed Rowe & Maw for the procurement process, Allen & Overy for financing advice and Denton Hall for advice on dealing with Railtrack.

Slaughter and May acted for Bombardier and Clifford Chance is acting for Fiat-Alstrom. Wilde Sapte acted for financiers GL Railease on the cross-country deal and Slaughter and May advised Royal Bank of Scotland, financiers of the west coast transaction.

Such transactions have become the staple diet of asset finance teams. Changes in UK tax law in 1997 cut the tax benefits of financing transactions around the capital depreciation allowance for short- and long-life assets.

As a result, the late 1980s and early 1990s boom in tax-driven leasing as a tool for wider structured financings has ended. In 1998, asset finance transactions reverted back to more conventional asset finance.

James Ballingall, head of asset finance and PFI at Theodore Goddard, says that the changes "cut back the scope for more aggressive tax-based financings that were happening a few years ago".

Adrian Miles, head of banking at Wilde Sapte, believes that the market became too clever for itself and is now returning to its roots.

Despite this, leading UK players report that 1998 was a bumper year for fees. Clients have been particularly active in aircraft, plant, telecoms and even satellite leasing.

But not all sectors have had a good year. Changing government policy towards gas and coal-fired energy generation has disrupted UK-based power station financing.

Ship finance has also had a mixed year. In the first six months many clients were active in tapping the US markets, with some issuing $200m-$300m in high fixed interest rate 10-year notes, but the crisis in the Far East forced many to put new equipment purchases on hold.

The 1999 forecast is mixed. Analysts say the flow of big-ticket work is increasingly bypassing the UK, with US firms arranging and advising on leasing and financing between the US and continental Europe.

The Netherlands, Germany and France in particular have benefited.

Norton Rose shipping finance specialist John Shelton says he has not been short of work, but that the market is "up in the air", and he would not be surprised if there is a downturn in coming months.

But Wilde Sapte's Miles says: "We are seeing a healthy order book for the new year – clients are being quite adventurous and we are satisfied this will continue."

As for new business opportunities, Shelton says to watch out for firms exporting their rolling stock leasing expertise to the continent as state-owned railways are pressured into working more closely with the private sector.