A Fairfax County attorney yesterday agreed to pay world heavyweight boxing champion Muhammad Ali $390,000 to settle a claim by Ali that the lawyer misused and spent some of Ali's funds last year. The out-of-court settlement, reached by attorney, Spiros Anthony, states that Anthony must pay Ali the $390,000 at the rate of $20,000 a month. If Anthony misses one payment, the total amount will increase to $625,000, less payments already made, according to the agreement.

The agreement also provides that a $3 million countersuit, filed in U.S. District Court in Alexandria by Anthony against Ali, be withdrawn.

The suit alleges that Ali owed Anthony $3 million in profits from various "joint ventures." According to court papers filed by Anthony the ventures included the retailing of packaged chicken called Champ Chicked and the sale of Mack trucks and prayer rugs in Middle Eastern countries.

Neither side admitted any wrong-doing as part of the settlement.

Louis Koutoulakos, one of Anthony's attorneys, acknowledged that the case had been settled, but declined any other comment.

Nelson Deckelbaum, another of Anthony's attorneys, said, "I think both sides are completely satisfied with the settlement."

Asked why his client did not go to trial, Decklebaum said, "I believe it was Abe Lincoln who said a good settlement is better than the best lawsuit."

Deckelbaum said he could not disclose how Anthony would be able to pay $20,000 a month to Ali. He said Anthony is still continue practicing law."

Anthony could not be reached for comment.

Ali's attorney, James J. Bierbower, said he and Ali were ready to got to the trial scheduled for today. Ali was to make a rare appearance in court as "the number on witness," Bierbower said.

We were all set to go, and everybody got together and settled the case," Bierbower said. Ali's testimony, "would have been an interesting thing to hear," Bierbower said.

According to court papers, Ali sued Anthony for $2 million, claiming Anthony "breached his . . . duties" as trustee of the money, part of Ali's $6.1 million gross from his boxing victory over Ken Norton last September in New York.

Ali charged that Anthony misused money placed into escrow for taxes by spending on himself. For instance, Ali said Anthony used $43,350 to buy rare French porcelain and other expensive antiques at Thieves Market in Alexandria. As Ali's trustee for four months last year, Anthony was responsible for handling money and property that the champion placed in his care.

Anthony denied that he misused funds that had been designated for Ali's taxes, estimated at about $2 million and due last Jan. 15.

Anthony paid $400,000 to the Internal Revenue Service for Ali, but two checks toward the balance of his client's $2.4 million tax bills were returned by a bank because of sufficient funds. Ali claimed. Anthony answered in court papers that the checks were returned because Ali stopped payment on them.

Ali claimed that part of the money he said had been reserved for taxes was spent on real estate ventures, in violation of the escrow agreement. Under the trustoe arrangement, the money Ali gave Anthony was to be invested "in a prudent manner."

According to the coourt documents, Anthony purchased for Ali a $1.8 million office building in the Springfield area and 24 condominiums in Herndon which had gone into foreclosure.

Bierbower said yesterday that he talked to Ali before agreeing to the settlement. When asked if Ali was satisfied, Bierbower said, "It's just an agreed settlement."

Bierbower siad that Ali has been in the Washington area "a couple times" to discuss the case and that he has visited Ali at his Pennsylvania mountain training camp. "He's an exciting person. That's the truth. He's very charismatic," Bierbower said.

Deckelbaum said he was not sure how Anthony, who practices in a suite in Skyline Towers at Baileys Crossroads came to be retained by Ali. But he added, "They had known each other for a couple years."