City firm Tarlo Lyons is to carry out a 'full debrief' to avoid repetition of an embarrassing discrimination action it settled this week.

The action was brought by Sarah Collins - the sole female partner for most of her five-year employment at the firm - who claimed substantial damages for alleged sex discrimination and unfair dismissal.

Ms Collins gave evidence - including lewd sexual details - last week at a London employment tribunal, which received considerable press attention.

Tarlo Lyons was set to give evidence this week but in a statement it said the case had settled on terms that will remain confidential.

The firm continued: 'Ms Collins unreservedly withdraws all her claims before the tribunal including her claims of sex discrimination against Tarlo Lyons.

For the avoidance of doubt, Miss Collins confirms that her complaint to the tribunal was never one of sexual harassment.'

Warren Foot, Tarlo Lyons' managing partner, said: 'We will have a full debrief and examine what changes we need to implement to minimise the risk of anything like this happening again.

We will take stock carefully rather than rushing into anything.'

He added: 'In any situation like this - whether you win, draw or lose - you don't want to be in this situation again, so we will be looking at our procedures to see how we can tighten things up.'

James Davies, the head of the employment and incentives department at City firm Lewis Silkin, acted for Ms Collins.

Jeremy Fleming