City firm Mishcon de Reya has settled a claim from an insurance syndicate against Anthony Julius.
Julius was being accused by insurance syndicate Hiscox of not revealing that he had shares in a company it was paying him to represent.
Julius, who was Diana Princess of Wales' personal lawyer, stood down as managing partner and head of litigation at the firm in 1998 to become a part-time consultant.
The action by Lloyd's syndicate Hiscox was rooted in a case dating back to 1996 when Julius represented now defunct newspaper London Financial News (LFN). It was sued by the chairman of Jupiter Asset Management for defamation.
But the defence of LFN was funded by underwriter Hiscox, and it is alleged that Julius did not tell it he was a shareholder.
Hiscox refuses to comment on the claim.
A statement from Mishcons says: "The parties have now resolved their differences.
"Due to a strict confidentiality clause the parties may not comment further."