In what is believed to be the first case of its kind, businessman Declan Ganley (left) forced a blogger to apologise and make a donation to charity after he was defamed in a series of tweets.
Legal experts believe we will see a "dramatic increase" in the number of people looking to sue for libel on Twitter amid a major focus on the dark side of social networking.
Media lawyer Paul Tweed told the Herald that a significant number of 'Twitter victims' have made legal complaints.
"I don't think people realise the significance of what they are saying on Twitter," he added.
High-profile lawyer Paul Tweed, who represented Mr Ganley told the Herald today: "We are seeing a dramatic increase in the number of people coming to us. People need to realise that anything you write on Twitter is still as defamatory as something that appears in print."
Mr Tweed successfully represented Declan Ganley in securing the settlement with blogger Kevin Barrington in relation to a number of defamatory tweets.
Mr Barrington confirmed on Twitter that he has paid a "substantial" donation to the Poor Clare Sisters charity in order to "reflect his regret".
"I wish to unreservedly apologise to Declan Ganley for the content of my tweets of December 2012. In future I undertake not to defame Mr Ganley. To reflect my regret, I have made a substantial donation to the Poor Clare's," Mr Barrington said.
Legal experts predict the settlement could be the first of many legal actions.
"It is most definitely the expanding area of our media practice at the moment. We have a number of clients on our books that have been subject to abusive comments on Twitter. We've been very surprised that it's not just ordinary people on the street contacting us, but journalists and other figures," Mr Tweed said.
The Belfast-based lawyer, who has represented a number of high-profile celebrities, said that the recent Lord McAlpine Case in the UK has served as a "wake-up call" to Twitter users.
The former politician is suing Sally Bercow, the wife of House of Commons speaker John Bercow, after she sent a tweet wrongly linking him to sex abuse.
Lord McAlpine was named online by dozens of people after the BBC Newsnight programme claimed that a senior member of Margaret Thatcher's government had taken part in child abuse at a care home in Wales.
Mr McAlpine is taking legal action against 20 tweeters who wrongly identified him as a child abuser.
Media lawyer Paula Mullooly of Simon McAleese Solicitors said that defamation laws apply online as everywhere else but large numbers of users are unaware of the consequences.
"Twitter is no different to anybody else defaming another person. It is no different to writing a letter, saying something on television, on radio," she told the Herald. "The problem is that people think they are having a private conversation
"All defamation requires is that you publish to one other person -- any kind of communication."
Ms Mullooly said that the only difficulty with pursuing an individual who has defamed another would be if they are writing in another country. Even anonymous accounts can be identified.
"Generally what you do in those circumstances (where there is an anonymous account) would be to ask Twitter to take down the information," she said. "Secondly, you would ask Twitter to identify the IP address.
"If they declined, you can take Twitter to court. This happens not infrequently. You can even track to an internet cafe," she added.
"If they have set up their blog externally and go through various routes to prevent their information being identifiable, that can cause difficulty. But it is very rare that someone is truly anonymous."