Bank of America filed a motion late Monday to disqualify Quinn Emanuel Urquhart & Sullivan as counsel to AIG in the insurer’s $10 billion suit claiming BofA, Merrill Lynch, First Franklin Financial, and Countrywide misrepresented the mortgage-backed securities they sold AIG. According to BofA’s lawyers at Munger, Tolles & Olson, a Quinn Emanuel partner who reviewed a draft of AIG’s complaint previously worked at Munger — and was privy to confidential information about how Merrill Lynch and its mortgage origination unit First Franklin intended to defend against MBS claims. Munger asserted that its former partner, Marc Becker, has a direct conflict of interest that should result in Quinn Emanuel’s removal from the AIG case.
“Quinn undertook this representation without even requesting a conflict waiver and screened Becker from involvement in this case only after defendants raised the issue,” the Munger disqualification motion said. “By then it was too late — Quinn had represented AIG in preparing this lawsuit for months, and Becker had already been involved in drafting the complaint and a significant motion in the case. Quinn’s flouting of the ethical rules mandates disqualification.”
Munger’s filings, first spotted by my Reuters colleague Noeleen Walder, disclose a trove of information about what happened between AIG and BofA in the months before AIG filed its $10 billion suit in July. They also raise the possibility that Bank of America will move to disqualify Quinn Emanuel in other cases involving MBS allegations against Merrill or First Franklin, including suits by the Federal Housing Finance Agency, Allstate, and Massachusetts Mutual.
Quinn Emanuel’s counsel, Gregory Joseph, said Munger’s disqualification motion is purely tactical. “Marc Becker practiced at Munger Tolles for 19 years as a highly respected and trusted associate and partner. They know perfectly well that he would not share any confidential information and he never did,” Joseph said in an email. “Bank of America doesn’t want to face Quinn Emanuel on the other side. Its motion never even addresses the governing standard — whether there is any risk of trial taint — because of course there isn’t.” (Quinn, as I’ve reported, pioneered MBS litigation and has filed dozens of suits for MBS investors, including most of the FHFA’s cases.)
Here’s the back story: Marc Becker was a partner at Munger Tolles until 2008, when he moved to Quinn Emanuel’s London office. According to declarations by Munger partner Marc Dworsky and former First Franklin general counsel and CEO Mark Malovos, Becker worked with First Franklin officers to craft an MBS defense strategy while he was a Munger partner. “Through his communications with Merrill Lynch and First Franklin representatives, Becker had access to highly confidential information and analysis regarding First Franklin’s home loan origination business,” the Dworsky declaration said. “Even more significantly, Becker was provided First Franklin’s internal projections of its exposure in connection with mortgage originations — the sensitivity and confidentiality of which is self evident.”