NEW YORK (CNN/Money) - Arthur Andersen LLP, which currently is trying to settle litigation due to its role in the collapse of Enron Corp., is in talks with rival Deloitte Touche Tohmatsu to merge or sell all or part of its business, a source familiar with the discussions told CNNfn Monday.

Andersen is considering many options, according to firm spokesman Patrick Dorton. "We are committed to making changes to our business that will restore the public's trust, enhance the quality and independence of our audit practice, and allow all of our practices to thrive," Dorton said, declining to comment further.

Deloitte Touche Tohmatsu confirmed that it is involved in "scenario planning exercises" to address current and future issues addressing the accounting industry. "It's inappropriate for us to discuss these planning exercises in public," Deloitte spokesman Matthew Batters said.

Chicago-based Andersen, the smallest of the Big 5 firms that include Ernst & Young, PricewaterhouseCoopers, KPMG, and Deloitte, also has pitched a deal to other members of that group. But any sale would hinge on Andersen's ability to wall off any Enron-related liabilities from its merger partner, press reports said.

However, any talks could prove fruitless because of the potentially huge liability Andersen faces for the handling of the Enron audits and the destruction of the bankrupt energy trader's documents. The firm's sale efforts run in tandem with negotiations it is having with the U.S. Justice Department in hopes of striking a settlement deal as early as this week, the Wall Street Journal reported.

Andersen hopes to avoid criminal obstruction of justice charges for the admitted destruction of documents related to its audit of the bankruptcy energy trader Enron. An indictment of the 88-year-old accounting firm could prove a fatal blow to the fifth-largest U.S. accounting firm, with 2,300 public audit clients.

One possibility being explored by Andersen is a Chapter 11 bankruptcy filing, with a sale or merger completed under court protection from creditors and litigants.

Although the Journal reported two people in the Andersen camp saying that Deloitte expressed interest in Andersen, and that talks were alive into the weekend, another person familiar with the situation said the world's third-largest accounting firm is not interested in an Andersen deal. The potential exposure of a merger partner to Enron-related issues in spite of a Chapter 11 filing could prove a formidable deterrent to any pact.

The talks, which have been taking place in New York, are being led by the firms' chief executives, Joseph Berardino of Andersen and James Copeland of Deloitte, according to the New York Times. A handful of partners from both firms as well as legal and financial advisers also have been involved.

A Deloitte-Andersen deal makes sense since the two have complementary businesses and their combined strength would make them a close second behind the No. 1 U.S. accounting firm, PwC, the Journal reported.

Additionally, Andersen clients might hang on if they knew they'd be dealing with a combined firm. A deal also would please Andersen partners who risk losing their retirement nest eggs and salaries as legal costs and defecting clients erode the firm's bottom line.

In addition to criminal charges, Andersen also faces possible regulatory action by the Securities and Exchange Commission as well as lawsuits from companies and individuals hurt by Enron's collapse, the Times reported Monday.

Meanwhile, Andersen spokesman Patrick Dorton declined to comment to the Journal about the Justice Department talks or any possible deal.