Herbert Smith had been AWG's main adviser for corporate, finance and regulatory work since 1989, but has been replaced by Linklaters following a panel review in which it was not shortlisted.
However, the firm will continue to advise AWG on litigation, including the utility group's high-profile £130m case against Sir Fraser Morrison, who sold his construction company Morrison Homes to AWG in 2000.
The switch comes as AWG prepares its defences against a possible takeover bid from WestLB, offering Linklaters the prospect of some highly lucrative M&A work.
AWG head of legal Patrick Firth approached eight firms, including Herbert Smith, last November, of which three – but not Herbert Smith – were shortlisted. Lovells and Slaughter and May made the shortlist, but also lost out to Linklaters. Firth told The Lawyer: “I was impressed with all three firms, any one of whom would have made good corporate advisers.”
Firth declined to comment on the reasons why AWG initiated the review. However, a source close to the process said AWG was “not entirely satisfied with the service from the existing lawyers”. The source said it was a combination of problems with relationship management and price. The utilities giant had not reviewed its external advisers since the late 1980s.
Herbert Smith, Linklaters, Lovells and Slaughters declined to comment.