I wonder if it applies to municipalities? If so, I can easily see the City of Durham cutting Nifong loose. He refused to look at defense evidence before pressing charges. That seems negligent to me. If Howlin is right, his stock downtown would be pretty low right now. In that case, it's all on his head and he, individually, can't possibly defend himself from what would happen.
Someone help me out here. In California, District Attorneys are county employees. Some cities use a City Attorney for real minor stuff, but 9999.9% is done by county DA's. Is NC different?
One has to be careful concerning 'negligence'. Conducting a negligent investigation does not necessarily make the DA liable. It's kind of complicated once you get into that aspect. A sham investigation, or one that displayed a deliberate indifference to the facts, does attach liability in most cases.
As for the expendature of government funds to defend nifong, it would likely be up to the state AG to make that decision. it is also possible that if the state AG claims Nifong was acting within his official capacity in good faith, the liability could be transferred to the state, and not the City of Durham.
Keep in mind that Nifong was appointed to a vacant position not too long ago, which may account for his utter stupidity about his potential liability. Unfortunately for him, stupidity is not a defense.
In the state o f Washington, there is a state SC ruling that says "every sane person is presumed to know the law." In Nifong's case, an insanity defense just might work.