The devastated Australian family and US fiance of Justine Ruszczyk Damond, who was gunned down, are in line to receive a record payout of more than $US10 million if they sue the city of Minneapolis.

Ms Damond, 40, was shot dead by Minneapolis police officer Mohamed Noor late on July 25 last year in an alley behind her home.

The former Sydneysider and life coach had called 911 after hearing a woman's screams and approached Noor's police vehicle unarmed and in her pyjamas.

The family and US fiance Don Damond (left) of Justine Ruszczyk Damond (right) are in line to receive a record payout of more than $US10 million if they sue the city of Minneapolis

Ms Damond, 40, (pictured) was shot dead by Minneapolis police officer Mohamed Noor late on July 25 last year in an alley behind her home

The former Sydneysider and life coach had called 911 after hearing a woman's screams and approached Noor's (pictured) police vehicle unarmed and in her pyjamas

'The city is in a very weak position and has to entertain astronomical numbers because it's too risky to go to trial,' veteran civil rights lawyer Paul Applebaum told the Minneapolis Star-Tribune.

Noor was charged by prosecutors last week with third-degree murder and second-degree manslaughter.

Minnesota legal experts say regardless of whether he is found guilty in the criminal case, the city of Minneapolis would still face a big payout from a Damond family civil lawsuit.

Another lawyer Randy Hopper said the city could agree to a settlement 'well in excess of $US10 million because of the egregious conduct'.

Mitchell Hamline School of Law emeritus professor Joseph Daly also predicted $US10 million or more.

'It would surprise me if this case went for $US20 million but it wouldn't shock me,' Professor Daly told the newspaper.

Minnesota legal experts say regardless of whether he is found guilty in the criminal case, the city of Minneapolis would still face a big payout from a Damond family civil lawsuit (pictured Ms Damond's father John Ruszczyk)

Another lawyer Randy Hopper said the city could agree to a settlement 'well in excess of $US10 million because of the egregious conduct'

A successful Damond family civil lawsuit could add to racial tensions with Caucasian Ms Damond being shot by Somali-born black officer Noor (pictured)

Ms Damond's family and fiance Don Damond have hired Robert Bennett, perhaps Minneapolis' most successful lawyer in winning police misconduct lawsuits.

A civil lawsuit is yet to be filed by the family.

The twin cities of Minneapolis and St Paul have been rocked by police shootings in recent years with race a central issue and protests involving Black Lives Matter and other groups.

A successful Damond family civil lawsuit could add to racial tensions with Caucasian Ms Damond being shot by Somali-born black officer Noor.

'The race of the decedent is huge,' Mr Applebaum said.

'It's terrible, it's sad, it's unfair, but the race of the decedent, it's a big factor.'