Birmingham are still waiting to receive an official approach from Aston Villa to speak to Alex McLeish - before the battle to thrash out a compensation package can get under way in earnest.
McLeish resigned as Blues boss on Sunday and the Scot has been the favourite with the bookmakers to replace Gerard Houllier at Villa.
Press Association Sport understands City will be seeking the full £5.4 million due in compensation for the remaining two years of McLeish's contract at the time he quit. This figure will be reduced to £3 million on July 1 but City will demand the amount that was due on the date McLeish ended his three-and-a-half-year reign.
McLeish, who is currently on holiday, is considering a case of constructive dismissal against Blues.
His relationship with City owner Carson Yeung became increasingly strained last season.
Such action by McLeish could drag on, as was the case when Martin O'Neill left Villa last August and did not settle the matter for nine months.
But bringing such a case against Birmingham will not mean Villa can automatically escape paying compensation to their midlands rivals for the remainder of McLeish's contract.
Any such action taken by McLeish against Birmingham would run alongside any battle between the two clubs over the former Rangers manager.
If the Blues were to decide to put McLeish on gardening leave then they may be able to put a block the Scot joining Villa for up to three months, according to an expert in football law.
FA-registered lawyer Katie Simmonds, who is a solicitor with FrontRow Legal in Leeds, said: "If Alex McLeish has a notice period of two to three months, as most contracts do, then Birmingham could place him on gardening leave for that time. What that would basically do is mean McLeish would have to stay away from working during that time, so long as it is a reasonable notice period."
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