Alan Thompson last night sought legal advice after being sacked by Celtic in a telephone conversation with the manager Neil Lennon.
No explanation has been given by the club for the decision to part company with the first-team coach.
Thompson's lawyer, Margaret Gribbon, of Glasgow-based Bridge Litigation, said in a statement: "I can confirm that I have been instructed to act on behalf of Alan Thompson following his dismissal by Celtic FC.
"Alan was informed of the decision to terminate his employment with immediate effect in a telephone conversation with the club manager Neil Lennon."
Nobody from Celtic was immediately available to comment.
Thompson, a midfield stalwart for Celtic under Martin O'Neill, and then Gordon Strachan from 2000 until 2007, returned to the club when Lennon was appointed in June 2010 as the club's permanent manager.
Another former team-mate, Johan Mjallby, was Lennon's first appointment, and the Swede was given the assistant manager's position.
The 38-year-old Thompson, with whom Lennon attended coaching courses while they were still players at Celtic, was quickly brought north from his job as reserve team coach at Newcastle United.
Initially on a short-term contract, he accepted the offer to become first-team coach at Celtic Park, with Garry Parker and goalkeeping coach Stevie Woods completing the backroom line-up.
Thompson was considered a key member of the management team which led the club to the Scottish Premier League title last season, and a man who Lennon would invite to give his opinion on tactics and team selection.
Thompson split from his wife, Jo, soon after returning to work at Parkhead, and in February last year he was banned from driving for 16 months and fined £600 after he pled guilty to a charge of drink-driving after an Old Firm game in October 2010.
Lennon, however, stood by his coach and former team-mate. The news that Thompson has now been relieved of his duties will come as a major surprise to fans and players alike.
After starting his career at Newcastle, his hometown club, he moved to Bolton and Aston Villa before O'Neill brought him to Parkhead in a £2.75m transfer.
He was a major figure in the side which won three top-flight titles under O'Neill, and he played in the Uefa Cup final in Seville in 2003.
Thompson's temper resulted in him picking up a hat trick of red cards in Old Firm games. His third and final dismissal in the fixture came in Strachan's first game against Rangers after he succeeded O'Neill as manager in 2005. Thompson picked up another league championship medal that season but, as Strachan began to bring in more and more of his own players and continued to lower the wage bill, Thompson began to find himself dropping out of the side.
In January 2007 he left to join Leeds on loan, before making the move permanent at the end of that season.
Now his second spell at Celtic is over, and Lennon is expected to immediately start the search for a replacement, though an appointment could be made from within the present coaching staff.
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