Crowell & Moring has settled a lawsuit brought by a client who alleged that ex-firm counsel Douglas R. Arnsten stole millions of dollars in real estate escrow funds. In a settlement announced Friday, the law firm said it followed through on an earlier promise to settle the matter to everyone’s satisfaction, particularly the client’s, Regal Real Estate.

Mr. Arnsten faces extradition from Hong Kong, where he fled in September as the police were prepared to arrest him. Regal, which had gone to the Manhattan District Attorney’s Office when Mr. Arnsten failed to return escrow money he allegedly stored in his own account, sued Crowell & Moring claiming the firm was responsible for the $5.5 million. On Friday, Crowell & Moring issued a statement saying it had “fully reimbursed Regal for the escrow funds that were lost as a result of Arnsten’s misconduct.” The firm continued, “We were appalled to learn that a former employee seems to have been involved in an elaborate plot to defraud our client and his colleagues at Crowell & Moring. The alleged conduct of this former employee is in stark contrast to everything we stand for as a firm and is entirely inconsistent with the strong reputation of trust we have built among our clients over the years. We are grateful to our client Regal for their patience in this matter and are pleased finally to be in a position to honor our obligations to them through this settlement.”

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