Attorney David Boies told CNBC that Hank Greenberg's lawsuit against the U.S. government over the $182 billion bailout of AIG is on solid legal footing and is not about "biting the hand that feeds you."
Boies, who is representing Greenberg's Starr International in the lawsuit, called it "an easy case to litigate."
Boies spoke Thursday, a day after American International Group refused to join the lawsuit on behalf of shareholders in the insurance company.
He told CNBC's "Squawk Box" the lawsuit is a test of the limits on what the government can demand in return for making loans.
Greenberg's suit alleges the government's 2008 AIG rescue was unfair to its shareholders, and the Federal Reserve Bank of New York charged an excessive interest rate on its initial loan. He's seeking billions of dollars in damages.
"[The government] can demand an interest rate, and it got a very high interest rate here. It can demand full security and it got full security," Boies said. "What [the government] cannot demand, as a court in Washington, D.C., has already ruled, is that the company give up its equity." He said the government in this case effectively took over AIG as part of the loan.
"There is a sense in which this is an easy case to litigate," said Boies, adding that it's unfortunate that while Starr would be able to move forward for its investors, AIG shareholders wouldn't benefit from any damages recovered.
Greenberg's Starr International owned 12 percent of AIG at the time of the rescue.
On Wednesday, AIG's current CEO Robert Benmosche told CNBC's "Closing Bell" that it wasn't in the interest of the company, its shareholders or the public to sue the government over the terms of its bailout.
Last month, the Treasury sold the last of its stake in AIG.
Benmosche said on CNBC, "My view right now is we had to pay back America. It came with a profit. We have a strong, vibrant company. We're thanking America and we have to go forward."
—By CNBC's Matthew J. Belvedere; Follow him on Twitter