As a cautious breed, lawyers are often the last to get excited about what they read in the press. So when claims emerged last week that Russian aluminium giant RUSAL was planning to turn its back on London in favour of a float in Hong Kong, many senior capital markets lawyers were yet to press the panic button.

But whether or not there are any legs to the story, one firm that should view such talk as a warning shot is Ashurst. The City firm is advising on the listing alongside Cleary Gottlieb Steen & Hamilton, but would risk losing its role if the offer moves away from London, as it has no office in Hong Kong.

The stakes are considerable – Ashurst has advised RUSAL, the world's largest aluminium producer, on most of its biggest corporate deals to date, a track record that has made the company one of its most lucrative clients. The firm is currently advising on its acquisition of a stake in Norilsk Nickel and took a lead role on its $30bn (£15.2bn) merger with Sual in 2006.

This must have made it particularly irksome when Cleary, underlining the substantial inroads it has made with Russian clients in recent years, secured a major role on the float. Should the listing, which has been valued at around $9bn (£4.6bn), go to Asia, the US-based law firm's impeccable securities credentials would surely make it first in line for the mandate.

Nevertheless, RUSAL-watchers are yet to be convinced that the deal will migrate to Asia. For a start, a float is unlikely in the short term as the Norilsk takeover has yet to close and the Russian company has shown little appetite for testing the market in anything but very robust conditions. It was only last March that RUSAL announced it intended to list within three years, which gives it plenty of time for the allure of London to return.

Diplomatic tensions

Still, it will not only be Ashurst hoping that the company sticks with London, considering the number of international law firms currently targeting Russia. A key area of concern is one of the issues cited as a reason for RUSAL to avoid London: the souring of diplomatic relations between Russia and the UK in the wake of the 2006 assassination of Alexander Litvinenko in London.

Many major Russian companies have already floated: Rosneft, Lukoil, Gazprom, Severstal and VTB – last year's biggest. But speak to any capital markets partner in Moscow and they will tell you there are a host of smaller but sizeable listings to come, which could be turn away from London if the political situation were to escalate.

Another issue for UK lawyers is whether the growing competition from emerging market exchanges and rival centres in Europe will start to hit London's securities work. Investor interest in Hong Kong is one thing, but smaller companies will also be tempted by Frankfurt, which is actively courting Russian companies, and Singapore, which is setting up a rival to London's junior market. Meanwhile, Moscow is seeing increasing float sizes, and the Middle East also has a number of growing exchanges.

In this setting, even if RUSAL does end up floating in London, the recent turn of events has highlighted a wider issue for firms such as Ashurst, which know their relative lack of foreign capability puts them at a disadvantage compared with the international securities strength of firms such as Cleary and some of London's largest firms. Of course, it is early days and the Square Mile has seen off plenty of threats in its day but London lawyers, however cautious, will be watching this one very closely.