Aston Villa were meeting managerial target Alex McLeish at a secret location in London on Wednesday, as their bitter battle with the Scot's former club Birmingham continued.
Press Association Sport understands that City are talking to their lawyers to decide what course of action to pursue against Villa, with McLeish having resigned from his post with them via email on Sunday and then opening talks with their fierce rivals.
Villa remain confident McLeish will still become Gerard Houllier's successor - despite the protests from some sections of their fans - and he could be unveiled before the weekend.
But Blues officials were meeting with their legal representatives at St Andrew's to see how best to combat Villa's plans. They announced their intention to lodge a complaint with the Premier League after believing Villa were guilty of "tapping up" McLeish although this has still to be firmed up.
Villa believe McLeish is a "free agent" but may be reflecting on an overall £20 million managerial outlay if he puts pen to paper on a four-year contract.
First Villa had to reach agreement with former manager Martin O'Neill who claimed constructive dismissal after parting company with the club last summer. Then Villa thrashed out a financial package for O'Neill's replacement Houllier who ended his Villa reign two weeks ago because of concerns over his health.
Birmingham are also looking for £5.4 million compensation to cover the remaining two years of McLeish's contract and have yet to formally accept his resignation. In addition Villa may have to compensate Blues should McLeish's backroom team of coaches Peter Grant as well as Andy and Dave Watson follow him out of St Andrew's.
Then McLeish's own contract with Villa would be worth in the region of £2 million a year at a conservative estimate. But Villa owner Randy Lerner believes McLeish is the right man to revive Villa's fortunes despite the backlash from some sections of the club's supporters.
A protest has been planned by some of them at Villa Park on Wednesday while a spray-painted message reading, 'Bluenose scum not welcome' was quickly removed from the wall outside the club's Bodymoor Heath training ground.
The Scot is a tough character and knows how high emotions can run between rival fans from his spell in Glasgow in charge of Rangers. He also witnessed the unpalatable scenes when Blues fans stormed the pitch to confront Villa supporters after the Carling Cup quarter-final between the clubs last season.
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