* Further litigation would only keep costs rising
* Trial was one of the most expensive UK criminal cases ever
LONDON, Oct 1 (Reuters) - Rupert Murdoch's British newspaper arm dropped its claim on Wednesday to be reimbursed for the multi-million dollar legal bills amassed during the phone-hacking trial of its former boss Rebekah Brooks.
Brooks, 46, was found not guilty by a jury in June on charges of phone-hacking, illegal payments to a public official and perverting the course of justice after a hugely expensive, high-profile eight-month trial at London's Old Bailey court.
News UK, the British newspaper arm of News Corp. which had paid Brooks' legal bills, said it had decided not to have the costs recouped from the state, estimated by local media to be as much as 7 million pounds ($11.4 million).
"Given the certainty that our costs would continue to increase disproportionately, we've taken the pragmatic view not to seek repayment ... for legal costs borne by the company," a News UK spokesman said.
The Guardian newspaper, which played a leading role in exposing phone-hacking, said the decision also spared the company any embarrassing scrutiny of its role before and during the trial.
Prosecutors had alleged that Brooks was complicit in the widespread hacking of voicemails on mobile phones carried out by journalists working for Murdoch's now defunct News of the World tabloid, which she edited from 2000 to 2003.
She was also accused of authorizing thousands of pounds in illegal cash payments while editing the sister daily paper the Sun, and then bringing in staff and her husband Charlie to try to thwart the police investigation when the hacking scandal engulfed the British political establishment in July 2011.
However, of the seven defendants only Andy Coulson, Prime Minister David Cameron's ex-media chief and Brooks' former lover, was found guilty.
Brooks was defended during the lengthy trial by Jonathan Laidlaw, who a source at his legal offices said was likely to have earned about $10,000 a day for the 138-day trial.
He was backed up by a team of lawyers paid more than $4,000 a day, and in addition News UK was paying the legal bills of her former personal assistant and its head of security.
However, Charlie Brooks will go ahead with an application for legal costs he incurred, which media said amounted to 600,000 pounds. Stuart Kuttner, the News of the World's former managing editor who was cleared, will also pursue a claim.
The vast legal costs helped to make the trial one of the most expensive criminal cases in British legal history. News Corp has paid out well in excess of $500 million in costs related to this and other cases in the phone-hacking scandal.
(1 US dollar = 0.6161 British pound) (Reporting by Michael Holden; Editing by Tom Heneghan)