Law Firm Unfit, Milken Team Says : Litigation: His lawyers say those handling a $6-billion suit against him should be disqualified because they also handled junk bond sales.

Attorneys for Michael Milken alleged Monday that a law firm seeking $6 billion for what it calls fraudulent junk bond sales to a failed thrift, itself handled numerous such deals, and even represented Milken’s old employer, Drexel Burnham Lambert Inc.

In court papers, the lawyers seek to disqualify the firm, Cravath, Swaine & Moore, from representing Columbia Savings & Loan Assn. in a lawsuit filed in Los Angeles federal court against Milken and others for alleged fraud.

Columbia, which purchased millions of dollars in high-yielding junk bonds from Drexel in the 1980s, alleged in its lawsuit that the collapsed Wall Street firm rigged the junk bond market, causing huge losses for the thrift.

But the motion, filed on behalf of Milken, nine other ex-Drexel workers and hundreds of Drexel partnerships, claims Cravath represented the underwriters or issuers of about $15 billion in high-yielding junk bonds in more than 100 deals.

It also claims that the law firm served as Drexel’s lawyer in six junk bond underwriting deals, and in 19 deals in which Columbia bought about $329 million in the debt securities.

The court papers said Cravath therefore “played a major role in the creation and perpetuation of the high-yield securities market now under attack.” It said Cravath’s reversal amounted to a conflict of interest and the firm should be disqualified from the case.

Cravath attorney Thomas D. Barr conceded that the law firm represented some syndicates of Wall Street firms that included Drexel to underwrite junk bonds.

But he said that under the law only Drexel has a legal right to assert a conflict of interest, and didn’t when Cravath filed a similar claim against it during Drexel’s bankruptcy proceedings.

Columbia was seized earlier this year by federal thrift regulators, who hired Cravath to recover money on its behalf. Cravath represents the Federal Deposit Insurance Corp. and Resolution Trust Corp. in a similar action in New York against Milken on behalf of other failed thrifts.

Under the firm’s agreement with the government, Cravath could receive up to $600 an hour if it recovers more than $200 million for the FDIC and RTC in the junk bond claims.

Milken, the former head of Drexel’s Beverly Hills-based junk bond department, is serving a 10-year prison term for six felonies related to illegal trading practices. None of the charges involved junk bonds.