The Mean Girls star entered a not guilty plea in court on Wednesday (09Feb11) amid allegations she stole a necklace from a jewellery store in Venice, California last month (Jan11).
Superior Court Judge Keith L. Schwartz revoked her probation stemming from a misdemeanour DUI conviction in 2007, and Lohan is currently free after posting a total of $40,000 (£26,670) bail.
The actress claims she took the necklace on loan and her legal representative, Shawn Chapman Holley, insists the star will only seek to settle the case with Los Angeles prosecutors as long as no jail time is involved.
Holley tells CNN, "Ms. Lohan maintains her innocence, and now that I've seen the police reports, I believe the case is entirely defensible.
"Having said that, we will entertain a discussion concerning a plea if it means no jail, so that she can move forward with her recovery and her career."
Lohan is next due in court on 23 February (11).