Applying for L1 B while waiting for H1 B lottery results?

My wife applied for H1B Work Visa with Sponsor A this year and waiting for Lottery result.

Now there is a requirement in her current company B, she cleared all the interviews.

Her current company is filing L1B Visa. I am not sure if their will be any legal issues if she will work on L1B?

And later if she got selected in H1B lottery , will she be have a choice to stay on L1 instead of H1?

Will there be any legal complications if we process L1 while waiting for H1 B lottery results?