Herbert Smith is advising Virgin Rail Group on its legal action against the Government after the company lost control of the West Coast Main Line franchise to rival rail operator FirstGroup earlier this month.

Virgin Rail has issued court proceedings today (28 August) to stop the Government signing the contract with FirstGroup, ahead of the deadline for action set at midnight tonight. London dispute resolution partner Nusrat Zar is leading the Herbert Smith team working on the matter.

The firm has instructed Blackstone Chambers' Michael Beloff QC and 11 King's Bench Walk's Nigel Giffin QC as counsel. Meanwhile, Eversheds is advising the Department for Transport, with litigation partners Mark Rhys-Jones and Nicola Williams leading the firm's team alongside Michael Bowsher QC of Monckton Chambers.

Virgin Rail – a collaboration between Virgin Trains and Stagecoach, a longstanding Herbert Smith client – has been operating the West Coast service since 1997 and put the cost of its bid for the contract at £14m.

However, the group lost the bid to continue operating the service earlier this month, with FirstGroup now set to take over the contract worth £5.5bn in December 2012 until 2026.

Transport secretary Justine Greening told the BBC today (28 August) that there will not be a delay in signing a new West Coast contract with FirstGroup.

However, more than 100,000 people have signed a petition, set up by a passenger in support of Virgin, to force a debate in Parliament on the decision.

In a statement, Virgin founder Richard Branson said: "We had hoped that Parliament or an external review would be able to scrutinise this badly flawed process before the franchise was signed. However, that opportunity would be denied if the Department for Transport follows through with its determination to rush through the process before Parliament returns next week.

"We have not taken this decision lightly, but it is the only course now available to try to unravel this sorry process."

The news comes after Burges Salmon, Herbert Smith and Eversheds were all handed roles on the bidding contest this month, with Herbert Smith acting for Virgin, Burges Salmon advising FirstGroup and Eversheds leading for the Department for Transport.

Herbert Smith has acted on a number of Virgin's largest deals in recent years, including a role advising Virgin Money's financial adviser Greenhills on the company's £747m acquisition of Northern Rock at the close of 2011.