Is there anyway to disable AI cops around the city? I mean routine patrols, officers on the street and in vehicles etc. similar to disabling peds and traffic. This feature would be very useful for multiplayer gaming sessions.

In Multiplayer you can. Create a new room. Before starting the match, look for the option that says POLICE. Switch it off. Congrats, you made Liberty City vulnerable to terrorists!

Will this disable LCPDFR spawning cop units as well?

No.

As long as you don't call in backup and don't attend the suicidal or gang hideout calls, no AI cops should spawn in a multiplayer match with cops turned off.