Locke battled Eastwood in court for 19 months; she developed breast cancer during the proceedings and said the treatments sapped her will to fight. In November 1990, the parties reached a private settlement wherein Eastwood set up a $1.5 million, multi-year film development/directing pact for Locke at Warner Bros. in exchange for dropping the suit. She got the West Hollywood property (valued at $2.2 million), about $500,000 cash and unspecified monthly support payments as well. Eastwood kept their pet parrot Putty and renamed him Paco.
Between 1990 and 1993, Warner Bros. rejected more than 30 scripts that Locke pitched to the studio – including those for Junior (1994) and Addicted to Love (1997) – and refused to let her direct any of their in-house projects. When her contract had yielded zero directing assignments three years in, Locke became convinced the deal was a sham. She began to seek corroboration and came across incriminating printouts from WB's bookkeeping records. Locke contended that the money WB pretended they were paying her came from Eastwood's pocket and was laundered through the operating budget of Unforgiven (1992). In June 1995 she sued him again, for fraud and breach of fiduciary duty. According to Locke's attorney Peggy Garrity, Eastwood committed "the ultimate betrayal" by arranging the "bogus" deal as a way to keep her out of work. Garrity added that Eastwood had held out the allegedly counterfeit deal "like a dangled carrot" to persuade Locke to drop the earlier palimony suit. Locke said that she "was stunned and outraged at the way I had been tricked and cheated a second time."
Locke practiced Transcendental Meditation and worked out with weights, though she hated running. In September 1990, she confirmed reports that she had breast cancer. "Due to factors in my personal life, I have sustained two years of extreme and unnecessary stress, which my doctors tell me has been my enemy," Locke said at the time. She added that Eastwood never communicated with her after her diagnosis: "He doesn't care if I live or die."
Locke underwent a double mastectomy at Cedars-Sinai Medical Center, followed by chemotherapy. During treatment, she began dating Scott Cunneen (born September 10, 1961, Long Beach, California), an intern assigned to perform the post-surgical checkup. Unfazed by their 17-year age difference – and the fact that Locke was only three years younger than his mother – they soon went public with the romance, dining at paparazzi hotspot Spago on one of their early dates in November 1990. Cunneen moved in with her in the spring of 1991. She called it a "real, supportive, and equal relationship."
Locke is remembered as an early pioneer for women in Hollywood. She was one of 11 female filmmakers in 1990, the year WB released her sophomore feature, Impulse. By the time of Trading Favors (1997), her fourth effort, still only eight percent of all films were made by women, per the Directors Guild of America.