<PAGE>
 
                                                                EXHIBIT 10.32

                       Champion International Corporation
                               One Champion Plaza
                              Stamford, CT  06921

                               October 18, 1990

Mr. L. Scott Barnard
One Champion Plaza
Stamford, CT  06921

     Re:  Agreement Relating to Legal Expenses
                                Dated October 18, 1990
                  ------------------------------------------------

Dear Scott:

     As an inducement for you to continue in the employ of Champion
International Corporation (the "Company"), the Board of Directors of the Company
has today authorized entering into an Agreement between you and the Company
effective October 18, 1990 (the "Agreement").  One of the principal purposes in
entering into the Agreement is to provide you with reasonable assurance in the
event of a change in control of the Company against loss of rights to benefits
that you could reasonably expect to receive in the absence of such a change in
control, and thereby provide an inducement for you to remain in the employ of
the Company notwithstanding the possibility of a change in its control.

     As a separate and additional inducement for you to remain in the employment
of the Company, and to provide you with reasonable assurance that the purposes
of the Agreement and this Agreement Relating to Legal Expenses (the "Legal
Expense Agreement") (collectively, the "Secured Agreements") will not be
frustrated as a result of the cost of their enforcement should a claim or
dispute be instituted or arise upon or within forty-two months following a
Change in Control of the Company (as defined in the Agreement) and arise out of
or relate to any provision of the Secured Agreements, the Company agrees to pay,
in consideration of such continued employment, all legal expenses which you may
incur in any such claim or dispute.  Such legal expenses shall be paid in the
amount provided in, and otherwise in accordance with the terms and conditions
of, the memorandum attached to, incorporated in and by this reference made part
of, this Legal Expense Agreement.

     By virtue of the mutual promises set forth in this Agreement Relating to
Legal Expenses and the Agreement and other good and valuable consideration the
receipt and sufficiency of which you and the Company hereby acknowledge, your
signature at the foot of this letter will constitute this letter a binding
agreement and it shall thereupon be binding upon and inure to the benefit of
you, your spouse, any other beneficiaries and your estate, and the Company and
its successors and assigns, including any corporation with or into which the
Company may consolidate or merge or to which the Company may transfer all or
substantially all of its assets.  If you are deceased and survived by a
beneficiary, then your beneficiary may act for herself or himself in enforcing
her or his rights under this Legal Expense Agreement as your survivor, and may
also act for you with respect to any rights to payments which became due and
remained unpaid during your lifetime.
 
<PAGE>
 
     For the Company's files, please execute the enclosed copy of this Legal
Expense Agreement and return it in an envelope marked "Confidential" to Lionel
N. Zimmer.
                         Sincerely,

                         CHAMPION INTERNATIONAL CORPORATION

Attest:                      By /s/ Andrew C. Sigler
                                ------------------------------
                                Chairman of the Board of Directors
/s/ Lawrence A. Fox
-----------------------------
Secretary


Agreed:  October 18, 1990

/s/ L. Scott Barnard
--------------------------------
L. Scott Barnard
 



                                      -2-
<PAGE>
 
               Memorandum of Terms and Conditions Referred to in
                    the Agreement Relating to Legal Expenses
                         dated October 18, 1990 between
             Champion International Corporation and L. Scott Barnard
             -------------------------------------------------------
     1.  Reference hereafter to the Agreement Relating to Legal Expenses (the
"Legal Expense Agreement") shall be deemed to refer also to this memorandum.
Terms used or referred to in the Legal Expense Agreement shall have the same
meaning or reference in this memorandum as in the Legal Expense Agreement.
     2.  The Company shall, upon presentation of appropriate commercial
invoices, pay all legal expenses, which includes reasonable legal fees, court
costs, arbitration costs, and ordinary and necessary out-of-pocket costs of
attorneys, billed to and payable by you or by anyone claiming under or through
you (such person being hereinafter referred to as your "beneficiary"), in
connection with bringing, prosecuting, defending, litigating, arbitrating,
negotiating or settling any claim or dispute by or against you or your
beneficiary, or any claim or dispute between you or your beneficiary and the
Company or any third party, that may be instituted or arise upon or within
forty-two months following a Change in Control of the Company, as defined in the
Agreement, and that may arise out of or relate to the Secured Agreements, or any
of them, or the validity, operation, interpretation, enforceability or breach
thereof, provided that:
       (a) you and your beneficiary shall repay to the Company any such expenses
theretofore paid by or on behalf of the Company if and to the extent that a
judgment should be rendered against you or your beneficiary by the judicial or
arbitration forum that adjudicates such dispute beyond appeal, and such expenses
were not incurred by you or your beneficiary while acting in good faith, and
provided further, that
       (b)  in the case of any request that the Company pay attorneys' fees or
expenses, the Company shall have received a statement signed by the attorney or
firm of attorneys rendering the bill setting forth the services that had been,
and will be, performed, and provided further, that
       (c)  in the case of any claim or dispute by or against you or your
beneficiary, the claim for legal fees hereunder shall be made in writing, with
specific reference to the provisions of the Legal Expense Agreement, delivered
in the manner provided in subparagraph 4(c) below, in no event later than forty-
two months after a Change in Control of the Company.
     3.  (a)  At any time after the date hereof but in no event later than a
Potential Change in Control of the Company as defined in the Agreement, if you
are in the employ of the Company at such time, the Company will, at its own
expense, set aside in trust, or establish, extend, renew and maintain an
irrevocable bank letter of credit in favor of you or, in the event of your
death, your beneficiary, in an amount equal to twelve (12) times the monthly
base salary being paid to you at such time.
       (b)  The Company has entered into a trust agreement substantially in the
form attached to the Agreement (the "Trust Agreement"), and agrees that, upon
the terms, conditions and procedures set forth therein, you will be named a
beneficiary of the Trust Agreement, and this Legal Expense Agreement will be
listed on Exhibit I of the Trust Agreement as one of the agreements which is
subject to the trust established by the Trust Agreement.  If the Company shall
become liable for the payment of legal expenses under paragraph 2 above, you or,
in the event of your death, your beneficiary shall request the Company in
<PAGE>
 
writing, in accordance with the terms, conditions and procedures set forth in
such paragraph 2, to make such payment and, if the Company shall fail to do so
fully within a reasonable time after receipt of such written demand, you may
request the trustee of such trust, in accordance with the terms, conditions and
procedures set forth in the Trust Agreement, to make such payment to the extent
that the Company had failed to do so.  The Company shall continue to be liable
to make all payments required under the terms of this Legal Expense Agreement to
the extent such payments have not been made pursuant to the Trust Agreement.
       (c)  If the Company establishes, extends, renews and maintains an
irrevocable bank letter of credit in favor of you or your beneficiary, you or,
in the event of your death, your beneficiary, shall be entitled to draw upon
such letter of credit only if and to the extent that the Company shall fail to
discharge its obligations under paragraph 2 above within a reasonable time after
receipt of written demand by you or your beneficiary.  As and when any funds are
paid by the bank under such letter of credit, the Company shall renew such
letter of credit at its own expense to the extent of the funds so paid.  The
Company need not establish or renew any such letter of credit for any period
subsequent to the date on which an attorney or a firm of attorneys selected by
mutual agreement of the Company and you or, in the event of your death, your
beneficiary, the fees and expenses of which attorney or firm of attorneys shall
be borne by the Company, shall determine, after consultation with the Company
and you or, in the event of your death, your beneficiary, that all obligations
of the parties under the Secured Agreements have been substantially satisfied.
       (d)  The bank that shall issue any such letter of credit shall be a
national or state bank having a combined capital, surplus and undivided profits
and reserves of not less than One Hundred Million Dollars ($100,000,000).
     4.  (a)  Any dispute between you and the Company as to the interpretation
or application of the provisions of either of the Secured Agreements may at your
election be determined by binding arbitration within the greater New York City
metropolitan area or the State of Connecticut in accordance with the rules of
the American Arbitration Association then in effect.  Judgment may be entered on
the arbitrator's award in any court of competent jurisdiction.  All fees and
expenses of such arbitration shall be paid by the Company subject to repayment
in accordance with the terms and conditions set forth in clause (a) of paragraph
2 above.
       (b)  Anything to the contrary notwithstanding, all payments and other
provisions required to be made by the Company under this Legal Expense Agreement
to or on behalf of you or your beneficiaries shall be subject to the withholding
of such amounts, if any, relating to tax and other payroll deductions as the
Company may reasonably determine it should withhold pursuant to any applicable
law or regulation.  In lieu of withholding such amounts, the Company may accept
other provisions to the end that it has sufficient funds to pay all taxes
required by law to be withheld in respect of any or all of such payments.
       (c)  All notices, requests, demands and other communications provided for
by this Legal Expense Agreement shall be in writing and shall be sufficiently
given if and when mailed in the continental United States by registered or
certified mail, return receipt requested, or personally delivered to the party
entitled thereto at the address stated below, which address shall be such
address as the addressee may have given most recently by a similar notice.  Any
such notice shall be deemed to have been received on the date of

                                       2
<PAGE>
 
delivery.
     To the Company:     Champion International Corporation
                         One Champion Plaza
                         Stamford, Connecticut  06921
                         Attention:  Corporate Secretary
     To the Executive:   Mr. L. Scott Barnard
                         One Champion Plaza
                         Stamford,  CT  06921
       (d)  No provision of this Legal Expense Agreement may be amended,
modified or waived unless such amendment, modification or waiver shall be
authorized by the Board of Directors of the Company or any authorized committee
of the Board of Directors and shall be agreed to in writing, signed by you and
by an officer of the Company thereunto duly authorized.  Except as otherwise
specifically provided in this Legal Expense Agreement, no waiver by either party
hereto of any breach by the other party hereto of any condition or provision of
this Legal Expense Agreement to be performed by such other party shall be deemed
a waiver of a subsequent breach of such condition or provision or a waiver of a
similar or dissimilar provision or condition at the same time or at any prior or
subsequent time.
       (e)  Anything in this Legal Expense Agreement to the contrary
notwithstanding:
          (i)  In the event that any provision of this Legal Expense Agreement,
or portion thereof, shall be determined to be invalid or unenforceable for any
reason, in whole or in part, the remaining provisions of this Legal Expense
Agreement and parts of such provision not so invalid or unenforceable shall be
unaffected thereby and shall remain in full force and effect to the fullest
extent permitted by law;
         (ii)  Any provision of this Legal Expense Agreement, or portion
thereof, which may be invalid or unenforceable in any jurisdiction shall be
limited by construction thereof, to the end that such provision, or portion
thereof, shall be valid and enforceable in such jurisdiction; and
         (iii)  Any provision of this Legal Expense Agreement, or portion
thereof, which may for any reason be invalid or unenforceable in any
jurisdiction shall remain in effect and be enforceable in any jurisdiction in
which such provision, or portion thereof, shall be valid and enforceable.
        (f)  Except as otherwise provided herein, this Legal Expense Agreement
shall be binding upon and inure to the benefit of the Company and any successor
of the Company, including, without limitation, any corporation or corporations
acquiring directly or indirectly all or substantially all of the assets of the
Company whether by merger, consolidation, sale or otherwise (and such successor
shall thereafter be deemed embraced within the term "the Company" for the
purposes of this Legal Expense Agreement), but shall not otherwise be assignable
by the Company.
        (g)  The validity, interpretation, construction, performance and
enforcement of this Legal Expense Agreement shall be governed by the laws of the
State of New York without giving effect to the principles of conflicts of laws
thereof.
        (h)  There shall be no right of set-off or counterclaim in respect of
any claim, debt or obligation against any payments to you, your beneficiaries or
estate, provided for in this Legal Expense Agreement.
        (i)  The Company and you recognize that each party will have no adequate
remedy at law for breach by the other of any of the agreements

                                       3
<PAGE>
 
contained in this Legal Expense Agreement and, in the event of any such breach,
the Company and you hereby agree and consent that the other shall be entitled to
a decree of specific performance, mandamus or other appropriate remedy to
enforce performance of such agreements.
        (j)  No right or interest to or in any payments shall be assignable by
you; provided, however, that this provision shall not preclude you from
designating one or more beneficiaries to receive any amount that may be payable
after your death and shall not preclude the legal representative of your estate
from assigning any right hereunder to the person or persons entitled thereto
under your will or, in the case of intestacy, to the person or persons entitled
thereto under the laws of intestacy applicable to your estate.
        (k)  No right, benefit or interest hereunder, shall be subject to
anticipation, alienation, sale, assignment, encumbrance, charge, pledge,
hypothecation, or set-off in respect of any claim, debt or obligation, or to
execution, attachment, levy or similar process, or assignment by operation of
law.  Any attempt, voluntary or involuntary, to effect any action specified in
the immediately preceding sentence shall, to the full extent permitted by law,
be null, void and of no effect.
        (l)  In the event of your death or a judicial determination of your
incompetence, reference in this Legal Expense Agreement to you shall be deemed,
where appropriate, to refer to your legal representative or, where appropriate,
to your beneficiary or beneficiaries.
        (m)  If any event provided for in this Legal Expense Agreement is
scheduled to take place on a legal holiday, such event shall take place on the
next succeeding day that is not a legal holiday.
        (n)  This Legal Expense Agreement shall be binding upon and shall inure
to the benefit of you, your heirs and legal representatives, and the Company and
its successors as provided in subparagraph 4(f) hereof.
        (o)  This instrument and the Agreement contain the entire agreement of
the parties relating to the subject matter of this Legal Expense Agreement and
supersede and replace all prior agreements and understandings with respect to
such subject matter, and the parties hereto have made no agreements,
representations or warranties relating to the subject matter of this Legal
Expense Agreement which are not set forth herein.
     5.  The Legal Expense Agreement is not intended to confer upon you any
right to continue in the employ of the Company or to affect any rights of the
Company, subject to any agreement or agreements between you and the Company
relating to your employment by the Company, to terminate your employment at any
time with or without assigning a reason therefor.



                                      oOo



                                       4