Oct. 18 (Reuters)—Bank of America Corp urged a judge todisqualify the law firm representing insurer American InternationalGroup Inc in its $10 billion mortgage fraud lawsuit against thebank, alleging a conflict of interest by one of the firm'spartners.

The bank said Quinn Emanuel Urquhart & Sullivan should beremoved because the partner had defended Merrill Lynch & Co andits First Franklin Financial Corp unit against similar charges thatthey made and sold defective mortgage loans. Bank of America boughtMerrill on Jan. 1, 2009.

While the partner, Marc Becker, is no longer working on the casefollowing the bank's objection, his earlier involvement is a“flouting of the ethical rules” and put him in position to use hisformer clients' confidential information, Bank of America said.

“Becker's involvement in this case has already tainted theseproceedings,” wrote Marc Dworsky, a partner at Munger, Tolles &Olson, which represents Bank of America and employed Becker until2008, in a filing on Monday evening with the U.S. District Court inManhattan.

“Quinn cannot be in a position to use defendants' confidentialinformation against them in the future — particularly in a case ofthis magnitude,” Dworsky added.

The challenge raises the stakes in one of the biggest lawsuitsstemming from the global financial and credit crises.

AIG obtained $182.3 billion of federal bailout and remains ownedlargely by taxpayers. It accused Bank of America and itsCountrywide and Merrill units of misrepresenting the quality ofabout $28 billion of mortgage-backed securities it bought, andlying to credit-rating agencies about the underlying loans.

Gregory Joseph, a lawyer for Quinn Emanuel, in an email calledBank of America's motion a tactical effort to remove the firm fromthe case. The firm is one of the largest specialists inmortgage-securities litigation.

“They know perfectly well that he would not share anyconfidential information, and he never did,” Joseph said, referringto Becker. “Its motion never even addresses the governing standard— whether there is any risk of trial taint — because of coursethere isn't.”

AIG spokesman Mark Herr called the Bank of America motion“simply an attempt to distract from the merits of the case.”

CONFLICT?

James Cohen, a Fordham University law professor and legal ethicsspecialist, said Becker's earlier work likely did not warrant QuinnEmanuel's disqualification from the AIG case.

“I don't think there is a conflict,” he said. “They areunrelated matters and his representation of Merrill and FirstFranklin is more than two years in the past. The mere claim that alawyer developed a strategy for defending this kind of lawsuit doesnot mean the lawsuits are significantly related.”

Cohen said it could prove “problematic” if presiding judgeBarbara Jones decided Becker was not screened fast enough, but thatan effective screen could address this issue.

He added: “It is of high value for a party to have the law firmof choice.”

Becker now works in London. He did not immediately return a callseeking a comment.

Quinn Emanuel's other cases include most of the 18 FederalHousing Finance Agency lawsuits against Bank of America, otherbanks and at least 131 individuals to recover losses on $200billion of soured mortgage debt held by Fannie Mae and Freddie Mac.

The FHFA is the conservator for the mortgage financiers.

The case is American International Group Inc v. Bank ofAmerica Corp et al, U.S. District Court, Southern District of NewYork, No. 11-06212.