Michael Cohen, 56, filed a lawsuit against the corporation in 2019, stating that it stopped paying his expenses after he began helping with inquiries into its operations.
The civil trial over the disagreement was scheduled to begin on Monday, with jurors being chosen and sworn in this week.
On Friday, lawyers of Michael Cohen and the Trump organization informed the court that the dispute had been settled.
The settlement has yet to be finalized, and its terms have been described as “confidential” by the two parties.
“A resolution was disclosed in court this morning,” Cohen’s attorney, Hunter Winstead, told the BBC. “The matter has been resolved in a satisfactory manner for all parties.”
The BBC has requested a response from the Trump Organization.
Opening arguments in the case were scheduled to begin on Monday, with Mr. Trump’s son, Donald Trump Jr., and Trump Organization executive vice president Alan Garten due to speak.
Michael Cohen worked for the ex-president’s real estate firm from 2006 until 2018 when he began testifying in a special counsel investigation into suspected Russian meddling in the 2016 US presidential election.
Michael Cohen also pled guilty to campaign finance crimes and fraud connected to hush money payments to porn star Stormy Daniels in exchange for cooperating with investigators.
He was sentenced to three years in prison, but due to the epidemic, he spent the majority of that time at home.
Michael Cohen, formerly a close associate and personal fixer for the ex-president, has been a thorn in his side ever since.
Michael Cohen accused the Trump Organization of breaking its contract with him in a 2019 lawsuit filed in State Supreme Court in Manhattan.
He said they signed an indemnification agreement in which the corporation pledged to cover all of his fees and charges in connection with company-related disputes.
However, despite written demands for compensation, Michael Cohen claimed that the corporation has not covered his legal bills since May 2018, nor the fines, forfeiture, or restitution linked to his guilty plea.
Attorneys for the Trump Organization have claimed that Michael Cohen’s criminal behavior and cooperation with investigators violated the agreement.
A related case brought earlier this year in Florida federal court by Mr. Trump against Michael Cohen for “spreading falsehoods” about him remains alive.
Cohen is also likely to be the key witness in the New York criminal case involving the payments to Ms. Daniels, which is expected to begin early next year.