Craig Levein is after £700,000 in unpaid wages following his sacking as the Scotland national team boss.
The 48-year old was last week given his marching orders by the Scottish Football Association who promised to continue paying him his £35,000-a-week wages for the remaining 20 months of his contract.
However, Levein wants the total in a lump sum and has begun legal enquiries into the matter as the payments will stop if he happens to land another job.
"As far as the SFA are concerned Craig is entitled to take whatever action he feels appropriate," said SFA chief Stewart Regan.
"He has chosen to go down a legal route. We have now had a letter setting out how he intends to manage the process.
"As far as the process is concerned now it is with lawyers.
"I am disappointed with the process I suppose, in so far as we have ended up where we are.
"I had a great relationship with him, he was an ultimate professional in terms of how he had gone about preparing and managing the development of the squad.
"I'm not prepared to go into the details of the final board meeting, but it's fair to say the board discussed the implications and consequences of the action we chose to take."