Attorney John Burris said the agreement "is an historic move on our part that is close to having a receiver run the department without having to go through the motions that would have been necessary to have a receiver."
City and police officials couldn't immediately be reached for comment.
Burris said the settlement must be approved by U.S. District Court Judge Thelton Henderson at a hearing on Dec. 13.
Henderson has been overseeing the Police Department's compliance with a Jan. 22, 2003 settlement of a lawsuit filed by 119 Oakland citizens who alleged that four officers known as the "Riders" beat them, made false arrests and planted evidence on them in 2000.
The settlement included payments of $10.5 million to the plaintiffs and their attorneys, Burris and James Chanin, and calls for the department to make reforms such as increased field supervision, better training and improved investigation of citizen complaints.
Burris and Chanin had been seeking a federal takeover of the department because they believe it has moved too slowly in complying with the settlement agreement.
Burris said the settlement reached today came after several weeks of negotiations between the two sides.
He said a compliance director could be in place within a month if Henderson approves the settlement and the two sides agree on a director.
Burris said a compliance director would report directly to the court and have the same status as a court-appointed monitor who already has been overseeing the terms of the 2003 agreement.
The director would be full-time, would be independent of the city and would have the power to demote or fire the city's police chief, Burris said.
He said the director would consult with city officials and the police chief but they wouldn't be able to veto the director's decisions.
Burris said the director would oversee compliance in reaching benchmarks in areas such as racial profiling, racially-biased policing, the "unjust" pointing of firearms at minorities by officers, reducing citizen complaints and improving policies in use of force and high-speed chases.
Burris said, "We hope this will move the Police Department in a positive direction."