Bird & Bird has been kicked off the £4bn High Court battle between Royal Bank of Scotland (RBS) and a group of former shareholders over a 2008 rights issue, with Fladgate replacing the firm on the mandate.

Led by dispute resolution practice group head Steven Baker, Bird & Bird had been acting for former shareholders of the bank, who are claiming they were misled into participating in RBS' £12bn rights issue at the height of the financial crisis, incurring significant losses as a result.

A statement from Bird & Bird suggests that the shareholders, collectively known as Action Group, decided to remove the firm from the claim following problems with the payment of fees.

Fladgate partner Steven Mash took over the group's claim last week and has retained Serle Court's Philip Marshall QC.

The statement from Bird & Bird said: "In what is a very complex and substantial claim our team has worked extremely hard for the group of claimants to ensure their case has been taken forward effectively, and we have continued to work on their behalf despite issues with receiving payment of our fees from the Action Group. We are therefore disappointed that the Action Group has chosen to take the decision to dis-instruct us, but we wish the claimants success in their ongoing legal dispute".

Herbert Smith is advising RBS and a group of former directors who are also the subject of the claim, including former chief executive Fred Goodwin.