A sex discrimination case filed six years ago by former Law School professor Clare Dalton was settled earlier this week when Harvard announced it would pay $260,000 to sponsor a new domestic violence institute at Northeastern University.

Harvard will pay the money to Northeastern over three years, with $80,000 set aside for Dalton's salary as executive director of the institute. The settlement was reached late Monday after a 10-hour negotiating session mediated by an official with the Massachusetts Commission Against Discrimination (MCAD).

Harvard continues to deny any gender discrimination in the Dalton case.

Dalton, now a tenured professor at Northeastern Law School, filed a complaint with the commission in 1987 after she was denied tenure at Harvard. The commission ruled last year that there was "probable cause" that she was discriminated against by Harvard.

Dalton said in an interview yesterday she feels the settlement is a "vindication" of her complaint of discrimination.

"It does signal that Harvard thought that it needed to do something to vindicate a wrong that was done to me," Dalton said.

Dalton's complaint stated that five men with lesser credentials were given tenure in the same year she was denied it. Dalton did not get the two-thirds vote of the faculty necessary for a tenure offer.

Law School Dean Robert C. Clark, however, said the resolution of the suit is in no way an admission of Law School fault.

"There was no trace of gender discrimination" in the Dalton tenure decision, he said. "I think we ultimately would have won."

Clark instead attributed the Law School's decision to settle to a need not to reopen old wounds.

"There was no point in dragging the faculty through an old battle," he said.

But a settlement seemed unlikely when attorneys and parties on both sides sat down to negotiate at 8 a.m. Monday morning. Without a settlement, Dalton's complaint would have been decided at a public hearing before a judge employed by the commission.

"The lawyers were fully prepared to do battle," said Nancy Gertner, a Boston attorney who represented Dalton. "It's a tribute to the mediator, who brought both sides together."

University Attorney Anne Taylor, who handled the case for Harvard, praised the settlement as "forward looking," but she also alleged that the commission made a finding of "probable cause" for Dalton last year without an adequate investigation. She said that Harvard had not discriminated against Dalton.

"The probable cause finding in this case was entered without any investigation by MCAD," Taylor said. "We're confident that if we had gone to a public hearing, we would have won a finding that says that."