Cisneros to Pay His Ex-Mistress $49,000 to Settle Breach-of-Contract Suit : Cabinet: The secretary, however, maintains he had no legal obligation to her. Linda Medlar, in turn, has agreed not to comment about the relationship.

Housing and Urban Development Secretary Henry G. Cisneros on Friday agreed to pay his former mistress $49,000 to settle her breach-of-contract suit against him, winning a pledge from her that she would not comment further on the matter.

The settlement came as problems mounted in choosing an independent counsel to investigate whether Cisneros purposely concealed from FBI agents that he had paid Linda Medlar between $42,000 and $60,000 a year.

It has been more than two months--the longest period ever in such a case--since U.S. Atty. Gen. Janet Reno asked a special court to name an outside prosecutor. But several lawyers who have been approached have turned down the three-judge panel, some citing conflicts with their private law practices, sources familiar with the selection process said.

“Some very, very good people have been contacted but there have been a lot of conflicts, as you might expect with a big department like HUD,” one source said. “Many law firms have cases involving that department.”

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One lawyer confided that he regards heading the investigation as a “no-win” appointment, saying it’s not a case that a federal prosecutor ordinarily would bring.

In announcing the settlement in Lubbock County, Tex., district court, of Medlar’s $256,000 damage suit for nearly one-fifth of that amount, Seagal V. Wheatley, Cisneros’ attorney in the civil suit, said that the secretary “is not now nor had he ever been under any legal obligation to Ms. Medlar.” Medlar contended that Cisneros had paid her $215,000 between 1990 and July, 1993, after their affair ended and promised to pay her $4,000 a month until her daughter graduated from college. Cisneros has denied that there was any such agreement.

The announcement said that Cisneros was trying to “compromise a very doubtful and disputed claim, devote full time to his family and duties without the necessity of a possible long trial,” and to settle for less than a trial would cost and to end disruption created by the suit.

Cisneros declined comment but a friend said that the secretary feared a trial would include a public airing of Cisneros-Medlar conversations that Medlar had secretly taped for almost four years.

The same prospect is not as likely in the independent counsel inquiry.

It was those tapes and press reports quoting Medlar as alleging that Cisneros had lied to the FBI about his payments to her during the background investigation for his Cabinet nomination that led to Reno’s seeking a special prosecutor. Comparing the transcripts of the tapes and the FBI’s background interview of the nominee established that Cisneros had provided false information, Reno said in asking the outside prosecutor be appointed March 13.

The settlement agreement provided that Medlar would make “no further references to the past relationship of the parties and, further, [would] conduct no interview of such nature.”

Floyd Holder, Medlar’s attorney in Lubbock, said that the agreement leaves his client and Cisneros free to speak with FBI agents. “The ban is only on public statements about the matter and it’s virtually unenforceable,” he said in a telephone interview. “There are no sanctions that I know of.”

The unprecedented delay in appointing an independent counsel is the latest snag in the Cisneros investigation. Under the independent counsel law, Reno had 90 days to conduct a preliminary inquiry but then asked for an additional two months to resolve the issue.

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Cono Namorato, Cisneros’ lawyer in the Washington investigation, joined him in declining comment.

But friends said that delay in the naming of the independent counsel is taking a toll on Cisneros and increasing the chance that he will have to quit his Cabinet post before Clinton’s term is up--not in admission of guilt but because of financial reasons.

The longer the delay, the longer the “clock keeps ticking” on lawyers’ fees.

He has told friends that his legal fees are already approaching “the halfway point” of the $250,000 he was told to expect it to cost to weather an independent counsel investigation.

Reno, asked Thursday whether she was concerned by the delay in naming an outside prosecutor, said that is a matter for the court to consider.

Several Washington attorneys commented on the difficulties lawyers would face in taking on the Cisneros assignment.

“It requires you basically to almost give up your practice,” one said. “It’s such a drain on your time that it almost takes you totally away from your firm.”

“You’re required to identify all your clients over the last two years, and a very active lawyer might not want to do that, nor would his clients want it,” said Jacob A. Stein, who served as independent counsel in an investigation of former U.S. Atty. Gen. Edwin Meese III.

“You run into complications if you have any cases dealing with the government,” he added. “And you must file a financial disclosure statement, which is a public document. So, finding counsels can become a little difficult.”

Stein, nevertheless, said that in the case of Cisneros, “someone could do a real public service by handling it. It would not take a large investigation since most of the facts already are known.”

But another veteran Washington attorney explained why he found the case “not particularly attractive. After all, he disclosed that he paid his mistress, even though his figures were off. It’s a no-win situation for you as an independent counsel in this case. If you prosecute him, it’s the wrong thing, and if you don’t, you get in hot water with women’s groups.”

Times staff writer Elizabeth Shogren contributed to this story.