I would take a shot at him. It'd give Farmar some competition. If he doesn't work out, cut him loose.
Livingston needs to go to a team that is willing to give him 2 years to fully recover. The problem is, he doesn't want to sign that type of contract because he is completely under market value for what he could be. If I were him, I'd go to the team that got helped a guy recover from microfracture surgery on both knees. Unfortunately, the Nuggets FO isn't smart enough to use that to convince him to join them.
I think the Lakers organization could be willing to be patient with Livingston. They've stuck by players in the past (Radmanovic, Mihm, Turiaf, Kwame) and the Triangle offense is taylor made for Livingston's skillset. The Lakers backcourt is solid for the most part and in two years if Livingston is back on track he'd be able to compete for the starting job. The hard part is working out the money. The Lakers certainly don't want to pay someone to basically rehab for two years and then have to open the wallet again to pay true market value for Livingston's "potential." Livingston needs to be smart about his NBA future though. If he prices himself out of the league he might find it hard to work himself back in the league. Out of sight, out of mind and every summer an influx of college players come in via the draft.
I can't see a reason to NOT sign Livingston. The triangle is built for guards like him. And if he's able to fully recover from his injury, he's got a tremendous amount of potential. Plus, it can't hurt Farmar to have competition. When we traded away Critt last year, his play went downhill because he had the 2nd spot all wrapped up, if we bring in Livingston, maybe he'd be able to push Farmar and make him play like he did the first 2/3 of last year, all year.