Slaughter and May, Herbert Smith and Simmons & Simmons are all understood to be looking at establishing a presence in Japan.
UK and US lawyers based in Tokyo say the market is booming, creating a great deal of interest from other international firms.
According to sources, the three City firms are planning to open up offices in the capital, while rival firms claim that all three have been on recent fact-finding missions to the city.
Slaughters used to have a presence in Tokyo but it closed in 1995 because of a lack of business.
However, at the time of the closure executive partner George Renwick did not rule out a return if the situation was to improve.
Slaughters denies the claim it is looking to open in Tokyo. The firm's head of the banking stream Richard Slater says that the firm has no plans to re-establish its Tokyo presence.
Slaughters' head of capital markets David Frank says: “I think the pool of work is pretty finite. It is difficult to staff an office in that sort of place.
“I think it is a difficult market for a foreign law firm to operate in.”
However, one UK lawyer based in Tokyo says: “I'd heard they had come over here and received a lukewarm response from their clients.”
Simmons & Simmons has been mooted as the UK firm most likely to enter the Japanese market next.
In 1997, it was poised to enter the marketplace but lost the partner it had earmarked to head up the new operation to Orrick Herrington & Sutcliffe LLP.
Orricks then immediately set up its own Tokyo office.
Interest has been re-ignited with the programme of deregulation undertaken by the Japanese government.
This has created a boom in securitisations work and all the leading UK firms in Tokyo have been staffing up in the course of 1998-99.
Herbert Smith's Asian presence currently extends to offices in Singapore, Hong Kong and Bangkok.
One partner at a rival firm with a presence in Japan says: “I'm surprised Herbert Smith haven't gone there already, but I suppose they missed out on the first round.”
See news analysis, page 12