Essex County Council could write off the £50,000 it says former leader Lord Hanningfield owes them.
The council's audit committee made the recommendation this morning, after concluding "the costs of pursuing this case would be significant, with uncertain chances of success".
Lord Hanningfield denies he owes any money to the authority.
Councillor Susan Barker, chairman of the Audit Committee, said: "The committee has today considered a report from the director of corporate law and assurance providing an update on Lord Hanningfield's expenses.
"The director reminded us of the background that led to this matter coming before us and highlighted the wide range of improvements to governance that have been made over recent years.
"The director indicated that in considering the question of whether the council should pursue Lord Hanningfield for the return of any monies that may be due, the committee would be asked to take into account the advice of leading counsel which, if the committee agreed, would be taken in private session.
"We considered carefully whether we should hear the advice in public or in private but decided that, on this occasion, we should hear the advice in private because it related to possible legal action.
" Miss Osborne gave the committee a detailed explanation of the legal risks and issues associated with the possible legal action.
"Miss Osborne advised that, in Counsel's view, with which she concurred, the costs of pursuing this case would be significant, with uncertain chances of success.
"She advised that in addition to the significant cost, the council would also have to invest further considerable officer time trying to prepare for and pursue the case, with unlikely prospects of success.
" It is with huge regret that, having taken account of the legal advice and the advice of our external auditors, we feel we have no alternative but to recommend that no further action be taken in this matter.
"The decision is for Councillor David Finch, the leader of the council, but that is our recommendation.
"We recognise that the Council now has robust governance arrangements in place and operates in a much more open and transparent environment.
"We are confident that this sort of extravagant and unreasonable expenditure does not, and would not, take place today.
"Councillor Finch has indicated that he will consider this matter over the next few days and will take on board the legal advice and, importantly, the recommendation of this committee, before reaching a decision."
