Iran-contra legal fight likely to last many months. The congressional Iran-contra reports come out today. But the mills of justice grind slowly for special prosecutor Lawrence Walsh.

With the release today of two reports by the special Senate and House committees that investigated the Iran-contra affair, Congress's role in the drama is largely over. But for special prosecutor Lawrence Walsh and the team of lawyers and investigators he has assembled, work has just begun. Mr. Walsh is expected in coming months to seek criminal indictments against at least four participants in the Iran-contra affair on charges of conspiracy, obstruction of justice, and misuse of public funds. They are former national-security adviser, Rear Adm. John Poindexter; former National Security Council aide, Lt. Col. Oliver North; retired Air Force Maj. Gen. Richard V. Secord; and General Secord's business partner, Albert Hakim.

Walsh, a former prosecutor and judge, was selected last December to lead the criminal investigation. His staff is made up of 23 associate counsel, 35 Federal Bureau of Investigation agents, 11 Internal Revenue Service agents, and 4 Customs agents. This team has conducted more than 1,000 interviews and pored over hundreds of thousands of documents, including 200,000 pages from the Central Intelligence Agency. The probe has cost $3.5 million thus far.

Once the indictments are handed down by a grand jury, many months - even years - will remain before the prosecutions are completed, unless the defendants agree to plea bargain. But despite some criticisms of his painstaking methods, Walsh has vowed there will be ``no short-circuiting of the investigation. ... Whatever prosecutions may be warranted will be brought.''

Walsh achieved a vital goal two weeks ago when he received Swiss bank records relating to the complex financial transactions in the affair. The records cover accounts set up in 1985 and '86 by Colonel North, General Secord, Mr. Hakim, and Iranian middleman Manuchur Ghorbanifar. Secord and Hakim reportedly controlled the accounts holding money from the sales of arms to Iran, and they allegedly disbursed funds from the accounts in support of the Nicaraguan contras' war effort.

One anonymous source with knowledge of the investigation says Walsh will ``argue that these funds were illegally converted.''

Another source, who also requested anonymity, says that although important evidence from other foreign bank accounts has been discovered, the Swiss records are ``the kind of documentation that you have to have when you go to trial.''

Another major hurdle for the special prosecutor will be proving that the evidence he has compiled did not flow from protected testimony during the congressional hearings.

To compel the testimony of some central figures in the affair without violating their Fifth Amendment right against self-incrimination, Congress granted them so-called ``use immunity.'' Such witnesses are protected from prosecution based on their testimony or on evidence uncovered through leads in their testimony. The grants of immunity, which Walsh tried to delay as long as possible, have put an additional burden on his inquiry.

Walsh has been presenting evidence to a federal grand jury two to three times a week since January. He has established a court filing procedure to preserve evidence in a demonstrably ``untainted'' form.

Before grants of immunity, Walsh gathered pertinent evidence and lodged the sealed documents with the court. Most of the prosecutorial team has worked in an environment insulated from news reports and public testimony.

The congressional reports will be analyzed first by a few ``tainted'' members of Walsh's staff in an attempt to sift out facts that do not rely on the testimony of immunized witnesses. Only those facts will be used by the other prosecutors.

``If possible, certain sections will be extracted,'' says Walsh press spokesman Jim Wieghart, who will take part in dissecting the report.

``It's going to take some time. But if we find that it's so interwoven, we'll just have to scrap it.'' Either way, Mr. Wieghart says, the prosecution's case won't be substantially affected.

``I don't think the report itself will make much difference,'' says Georgetown University legal evidence scholar Paul Rothstein. ``The big influence will be psychological. They are all human beings with an eye on history. If the report says everything's OK, it will be a lot harder for the special prosecutor to tussle within himself and convince a judge and jury.''

This raises a ``crucial question in the law that has never been tested,'' says Professor Rothstein. How can witnesses be granted immunity from self-incrimination by Congress and simultaneously be prosecuted by an independent prosecutor? He asks, ``How can we pretend this promise [of immunity] will be kept?''

Admiral Poindexter and Colonel North were among the witnesses granted immunity by the congressional panels.

Walsh has acknowledged that the grants of immunity could ``possibly have a destructive impact.'' He notes that after the Watergate hearings in the early '70s, another investigation in which a large number of key witnesses were granted limited immunity, John Dean III and Charles Colson subsequently pleaded guilty to crimes. But, Walsh observes, ``no immunized Watergate witness who refused to plead guilty was successfully tried and convicted.''

He adds, however, that ``the public is entitled to a fair and deliberate prosecutive judgment.''

A methodical approach to law enforcement has characterized Walsh since the beginning of his career in the 1930s when he established a reputation as a tough prosecutor, going after gangsters, corrupt judges, and politicians.

Asked at the time of his appointment whether he would seek to question President Reagan, he said he ``would talk to anyone necessary.'' The White House said yesterday that Mr. Reagan is preparing written answers to questions submitted by Walsh.

Presidential spokesman Marlin Fitzwater said written questions were given to the White House Oct. 10 by Walsh. ``Those are being responded to now,'' Fitzwater said, with the help of the President's counsel, A.B. Culvahouse Jr., and should be ready ``in a couple of weeks.''

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