In Hong Kong capital markets circles, one question has trumped all others over the past month: What will Alibaba do?

The Chinese e-commerce giant is planning what is expected to be the world’s largest initial public offering since the $16 billion Nasdaq debut of Facebook Inc. last year. If Alibaba Group Holding Ltd. goes ahead with a listing in Hong Kong, it could be a huge shot in the arm to a market that has seen a major slowdown in IPOs over the last two years.

But Alibaba chairman Jack Ma wants a shareholder structure that would allow a partnership of himself and other senior executives to appoint a majority of the newly listed company’s board of directors despite not owning a majority of the shares. The Hong Kong Stock Exchange doesn’t permit different classes of shareholders, so it would need to make an exception for Hangzhou-based Alibaba. If it doesn’t, the company may head instead to New York, where dual classes of shares are fairly common in tech IPOs.

For at least some Hong Kong deal lawyers, a U.S. listing for Alibaba might not be such a bad outcome. Though they have invested heavily in building out Hong Kong law practices over the past few years, U.S. firms also have an interest in seeing the pipeline of Chinese companies seeking New York Stock Exchange and Nasdaq listings grow again. The number of such listings has fallen precipitously in recent years, as short-seller reports have rattled the market and invited a tide of shareholder litigation. Last year, only two Chinese companies listed in the U.S., compared to 34 in 2010.

“Obviously from a U.S. lawyer’s perspective, we’d like to see more activity on the U.S. IPO front,” says one Hong Kong partner with a New York firm. Like many of the lawyers who spoke to The Asian Lawyer about the matter, the partner requested anonymity because he may become involved in the deal.

Though U.S. lawyers generally get hired to manage disclosure and draft the prospectuses for large Hong Kong IPOs in which international investors participate, the partner said an actual Securities and Exchange Commission–registered listing generates considerably more U.S. law work. “You’ve got SEC rules, New York Stock Exchange listing rules, Sarbanes-Oxley, [Financial Industry Regulatory Authority]—there’s a lot more real law involved.”

Where the IPO takes places will very likely determine who gets the work. An Alibaba spokesman said the company has not yet hired any underwriters but declined to comment on legal advisers. Freshfields Bruckhaus Deringer, where Alibaba general counsel Timothy Steinert was formerly a partner, has handled most of the company’s Hong Kong capital markets work in the past, including a 2007 IPO for the company’s portal and the company’s $7.1 billion buyback of shares from Yahoo Inc., and is seen as the most likely choice in the event of a Hong Kong listing. But a partner at another large U.K. firm said he understood no final choice for Hong Kong counsel had yet been made and that his firm intended to pitch for the role.

If the listing is in New York, though, all bets are off. One U.S. firm partner in Hong Kong says he can’t think of a Nasdaq or New York Stock Exchange IPO anywhere near Alibaba’s size that has ever been handled by a non–U.S. firm. One of the leading New York firms like Sullivan & Cromwell or Simpson Thacher & Bartlett would more likely get the nod, he says.

The U.K. firm partner agreed. “If this goes to New York, we’re not going to be involved one way or the other,” he says.

Though the U.S. was once a major IPO destination for Chinese state-owned enterprises like PetroChina Co. Ltd., which listed on the New York Stock Exchange in 2000, these days it is mainly technology companies that want a U.S. listing. Unlike in Hong Kong, which requires listing companies to have been operating for three years, there is no track record requirement in the major U.S. exchanges, a fact that favors start-ups. And Chinese tech companies have also counted on U.S. markets, with their greater infrastructure of tech-savvy investors and analysts, to deliver them higher share valuations. For those latter reasons, some partners think Alibaba would be wiser to list there anyway.

“I think it would be better for them to be benchmarked against Amazon and those types of companies,” says one U.S. firm partner, though he adds that Alibaba, which had revenue of $4 billion last year, was a big enough company that U.S.–based tech investors and analysts would pay attention no matter where it lists.

If Alibaba were to list in Hong Kong, that might encourage other Chinese tech companies to list there instead of the United States. Of China’s two other leading Internet companies, Baidu Inc. is listed in the U.S. while Tencent Holdings Ltd. is in Hong Kong.

The Hong Kong Stock Exchange would no doubt like to be more of a destination for tech companies as well as restore its standing as an IPO capital more generally. From 2009 to 2011, Hong Kong was the world’s top destination for IPOs, but it fell to fourth place last year and is still well behind the U.S. so far this year.

An Alibaba listing by itself would push Hong Kong near the front of the pack again. “From the exchange’s perspective,” says the U.K. firm partner, “they haven’t had a listing of this size for quite a while.”

But while the Hong Kong exchange listing committee has strong incentives to let Alibaba have its way, it also faces strong pressure not to back down. Jeffrey Maddox, a Hong Kong partner of Cadwalader, Wickersham & Taft, explains that the Hong Kong economy’s historic domination by a handful of family-run conglomerates makes the issue of minority shareholder rights much more sensitive than in the U.S.

“I think the worry is that, if they allow Alibaba to have this structure, everybody else will want it too,” he says. “That would have a negative effect on Hong Kong as a world-class market.”

In the U.S., Maddox says, concerns about control are generally addressed by more disclosure. The threat of shareholder litigation and the role of lead director also act as strong checks on management.

The U.K. firm partner noted that the Hong Kong exchange had refused to budge last year when the owners of the British football team Manchester United had likewise sought to maintain control by issuing different classes of shares. The team ultimately listed in New York instead.

“It seems to be fairly sacrosanct principle” that all Hong Kong shareholders have equal rights, he says. “There is really a lot of concern about opening the floodgates.”