Arent Fox has reached a settlement with a former client who sued the firm and one of its lawyers for allegedly bungling a life insurance policy financing deal, court records in the legal malpractice case show.

Windsor Securities sought more than $6 million for what it said were failures by Arent Fox and its partner Julius Rousseau to ensure that it had the ability to seize life insurance policies that it had lent funds to purchase. The case appeared headed for trial after U.S. District Judge George Daniels of the Southern District of New York ruled in March that key facts remained in dispute.

In a docket entry dated May 6, however, the court wrote that “the parties reached a settlement agreement.” Details of the settlement weren't public. A court clerk said a transcript of a May 6 court conference was sealed.

Peter Wang, a partner at Foley & Lardner who represents Arent Fox, declined to comment, while Alan Frank of Alan L. Frank Law Associates, who represents Windsor, did not return a message seeking comment.

The settlement could bring three years of litigation to a close. Windsor, which was engaged in the premium financing business, lent money to trusts so they could purchase policies on certain elderly people. If the covered person died, the proceeds could pay down the loan; if the trust defaulted on the loan, Windsor was supposed to be able to seize the policy as collateral.

According to Windsor, Rousseau advised that once the funds it loaned to the trusts came due, it simply needed to file a change-of-ownership form with the life insurance companies for it to get its hands on the policies. That legal theory was tested, however, when John Bitter, one of the insureds, died, and the trustee that held his policy disputed Windsor's entitlement to the policy's proceeds.

The policy disputes turned on the agreements between Windsor and the trusts and how Section 9620 of the California Commercial Code bore on the transfer of the insurance policies. In the Bitter case, an arbitration panel faulted Windsor for not invoking the default sales right in its agreements with the trust. Windsor's malpractice suit claimed Rousseau was negligent to have missed it.

In his summary judgment decision last March, Daniels dismissed certain claims as duplicative of the legal malpractice claim at the core of Windsor's suit. He also ruled in favor of the law firm defendants on counts worth a total of about $38,000, but he said expert witnesses disagreed about key issues relating to Arent Fox and its lawyer's negligence and whether they were the proximate cause of the losses at issue.