Each woman will receive $2.1 million each. The agreement is in addition to a $40,000 settlement reached in March for the loss of the women's pickup truck.
"I am pleased that a fair settlement was swiftly reached in order to resolve any outstanding claims," said Los Angeles City Attorney Trutanich. "In reaching this settlement, we hope Margie and Emma will be able to move on with their lives, the city will be spared millions of dollars in litigation expense and time, and this unfortunate chapter of the Dorner saga will be put to rest."
Margie Carranza and her 71-year-old mother Emma Hernandez were delivering newspapers in their Toyota pickup truck in the early hours of Feb. 7 when LAPD officers, who were guarding the Torrance home of a police target named in Dorner's manifesto, fired at least 100 rounds.
Dorner, who had vowed warfare on numerous LAPD officers and their families, was believed to be driving a dark-colored pickup. The women were in their blue truck when the violence suddenly erupted. Hernandez was shot twice in the back, but survived. Carranza had a minor injury. The truck was riddled with bullets.
The women's attorney Glen Jonas calls it a fair and swift settlement, saying a drawn out trial wouldn't have been good for the city or his clients.
"4.2 million (dollars) means a lot more to her today than potentially 7 million 10 years down the road," Jonas said.
In a statement, the LAPD said, "While this potential settlement may conclude the civil action in this matter, it in no way impacts the department's ongoing investigation."
Jonas said the women don't want to talk publicly about the ordeal, but they are pleased with the settlement and hope the LAPD's investigation will be just as fair.
"I expect there will be some measure of discipline," Jonas said. "In addition to that, we expect there to be re-training on some of the issues that arose that evening that led to this incident so that it doesn't happen again."
The settlement must still be approved by the L.A. City Council.
The Associated Press contributed to this report.