As Wal-Mart Stores Inc. (NYSE: WMT) turns to late-night TV to try to boost its image, the Julie Roehm scandal continues to produce negative publicity, regardless of whether Ms. Roehm is telling the truth. A few days ago, Bloomberg reported that the company was facing a lot of pressure to reach a settlement with Roehm, and put an end to the rumors and innuendo.

Last month, Roehm called for the departure of CEO Lee Scott and others she accuses of violating the company's ethics policy. Some worry that a continuation of the battle with Ms. Roehm could lead to more damaging allegations which, regardless of their verity, could further harm the company's reputation.

In retrospect, there's almost no question that Wal-Mart should have settled the suit months ago, when Roehm was seeking approximately $1.5 million in salary and punitive damages. But now that the issue has been grabbing headlines for so long, a settlement could be seen as an admission of wrongdoing, and could generate even more negative publicity.

At this point, Wal-Mart is in a tough position. If Scott and others truly believe they're innocent of any wrongdoing, is it better to let the legal process run its course, regardless of the headlines generated in the interim? Would a settlement put an end to the negative publicity?

The issue really seems to hinge on what else Ms. Roehm has up her sleeve. If accusing Scott of buying a ring from a vendor was all she's got, then they may not want to settle. But if there's more to come in subsequent legal filings, a settlement is probably in the company's best interests.