Asking for Friend:
Current L1 is going to expire in 2022 May, if he changes the status to H4 ( spouse on H1) to stay in the USA. Can he apply for H1 2023 year (after 356 day period)? or 365 days stay out of the USA is a must even he is having a change of status to H4?
If he has not used the complete 7 years of L1A, H1B may be approved for the rest of the L1A term with change of status from H4 to H1B. Otherwise he has to be outside of the US for 1 year to be eligible for a fresh H1B term of 6 years in total.
Other option is to have a PERM (green card job) sponsoring employer while on H4, and get I-140 approved before changing to H1B (if any L1A term left). Once H1B is approved for the rest of the L1A term with change of status from H4 to H1B, his H1B can be extended further using under AC21 and the approved I-140. In this case there is no need to spend 1 year outside of the US.
Alternately he can work on H4 EAD if the primary H1B has approved I-140.