Steve Davis, the former chairman of Dewey & LeBoeuf, has agreed to a half-a-million-dollar settlement with the firm's trustee and insurer over claims that bad management contributed to the US firm's high-profile  collapse.

Davis (pictured) has agreed to pay $511,145 (£335,000) to resolve all claims, while XL Specialty Insurance, which issued Dewey's management liability insurance policy, said it would pay $19m (£12.4m) in the proposed settlement.

Papers filed with the US Bankruptcy Court for the Southern District of New York on Monday (23 April) said the settlement was the product of a protracted, 'arms-length' negotiation, including mediation. Davis is being represented by Kirkland & Ellis partner Kevin Van Wart.

Mismanagement claims include allegations that Davis, along with executive director Stephen DiCarmine and chief financial officer Joel Sanders, over-distributed cash to select partners, relied on guarantee agreements "that bore no economic rationality" and concealed Dewey's "true financial condition from its partners, employees and creditors".

The filing states Davis "denies any wrongdoing on his part at Dewey" and that prior to bankruptcy, "he fulfilled his duties and at all times acted in what he reasonably believed was in the best interest of Dewey and its estate".

The settlement still requires the approval of Judge Martin Glenn, in a hearing set for 13 May.

Brown Rudnick partner Edward Weisfelner, who is advising the liquidation trustee Alan Jacobs, said a settlement is a substantially more favourable result than potentially lengthy and expensive litigation.

Dewey became the largest law firm collapse in US history when it filed for Chapter 11 bankruptcy last May. Davis, who was first elected chairman in 2007, spearheaded much of Dewey's international expansion before the firm ran into serious cashflow problems and subsequently collapsed in 2012.

A proposed settlement plan in August last year between the firm's estate and former partners expressly excluded Davis, alongside DiCarmine and Sanders, from participating.

Neither DiCarmine nor Sanders were parties to the latest settlement.