SANTA ANA — In what would become the first major victory in Orange County's campaign to recover the $1.64 billion in securities trading losses that drove it into bankruptcy, the county has tentatively agreed to settle its lawsuit against its former bond lawyers in exchange for as much as $50 million, officials said.
But the proposed settlement with LeBoeuf, Lamb, Greene & MacRae is being held up by the North Orange County Community College District, which is a party to the county's lawsuit and has a separate legal dispute with the law firm.
During the last few months, attorneys for the county and LeBoeuf have held a series of secret bargaining sessions to negotiate the settlement, which legal experts said could amount to one of the largest damage settlements ever by a law firm. Sources said the firm's malpractice insurance would cover any payment up to $50 million.
A payoff by the law firm would allow cities, schools and special districts to recover a portion of the hundreds of millions of dollars they lost when risky securities purchased by former Treasurer-Tax Collector Robert L. Citron plunged in value in the fall of 1994, triggering the nation's largest bankruptcy by a government entity.