EXCLUSIVE

Conor McGregor has one less legal issue ... the man suing him in the Miami phone smashing incident has dropped his lawsuit against the UFC star and all signs point to settlement.

As we previously reported, 22-year-old Ahmed Abdirzak sued Conor for battery, assault and intentional infliction of emotional distress over the March 11 incident at the Fontainebleau hotel.

Abdirzak claims Conor "flew into a rage and punched [Abdirzak's] smart phone out of his hand" before "stomping on the phone repeatedly." Abdirzak was demanding north of $15,000.

Part of the incident was captured on video and posted by TMZ Sports.

Play video content TMZSports.com

Now, court records show Abdirzak has filed new documents to dismiss his suit against McGregor with prejudice -- which likely means the two reached a settlement agreement.

It's smart money for Conor considering he's worth a fortune and could easily cut a check to put the matter behind him.

McGregor is still facing criminal charges for the incident -- including felony robbery and misdemeanor criminal mischief. If convicted on all counts, Conor faces up to 6 years in prison.

His case is due back in front of the judge later this week.

McGregor doesn't seem too bothered by the situation -- he's been partying all over the world, feuding with his UFC rivals and watching WrestleMania.

Before he filed his lawsuit, Abdirzak appeared on "TMZ Live" in March and told us he hadn't decided if he was going to sue, insisting he just wants "justice."