NEW YORK, Dec 6 (Reuters) - A federal judge on Tuesday rejected Bank of America Corp's request to disqualify the law firm representing insurer American International Group Inc in its $10 billion mortgage fraud lawsuit against the bank, over an alleged conflict of interest by one of the firm's partners.

U.S. District Court Judge Barbara Jones ruled that the partner's minimal involvement in the case and AIG's established relationship with Quinn Emanuel Urquhart & Sullivan weighed against removing the law firm from the case.

Bank of America asked the judge in October to disqualify the law firm because its partner, Marc Becker, previously defended Merrill Lynch & Co and its First Franklin Financial Corp unit against similar charges of mortgage fraud. Merrill Lynch and First Franklin are now both subsidiaries of Bank of America and defendants in the case.

Becker was a partner at Munger, Tolles & Olson, which represents Bank of America, before he moved to Quinn Emanuel in 2008. He left Quinn Emanuel shortly after the bank filed its motion to disqualify the firm.

Although Quinn Emanuel removed Becker from the case after the bank's objection, Bank of America's lawyers argued that Becker's involvement broke ethical rules by placing Becker in a position to use his former clients' confidential information. But the judge disagreed.

Although Becker performed 5.8 hours of work for AIG on the case after his move, Quinn Emanuel promptly separated him from the case within 24 hours of discovering the conflict, the judge found.

"Screens erected immediately upon discovery of the conflict weigh against disqualification," Jones wrote. Becker's minimal work on the case and his physical distance from it in firm's London office made any disclosure of confidential client information unlikely, she added. The size of Quinn Emanuel, with more than 500 attorneys, reduced that risk further, she wrote.

"There is no meaningful showing that the trial process here will be tainted," Jones ruled. Given AIG's "significant" relationship with Quinn Emanuel and the cost of finding new counsel, she refused to disqualify the firm.

Marc Dworsky, a lawyer for Bank of America at Munger, Tolles & Olson, did not immediately respond to a request for comment.

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

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

For AIG: Kathleen Sullivan of Quinn Emanuel Urquhart & Sullivan.

For BofA: Marc Dworsky of Muger, Tolles & Olson.

(Reporting by Terry Baynes)

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