David O'Leary looks set to go to court to sue his former club Leeds United following his dismissal two months ago.

Talks between O'Leary and Leeds chairman Peter Ridsdale over a compensation package for the Irishman have broken down without agreement.

O'Leary's advisers were initially confident of reaching a settlement with the club.

But the Daily Mail newspaper says he is now expected to take his former club to a Premier League sackings tribunal.

O'Leary had four years of his contract at Elland Road remaining when he was dismissed and feels he is entitled to a pay-out of at least �1m.

Leeds are looking to reduce that figure, claiming that the relationship between them had deteriorated.

The row is set to heap further embarrassment on the club who will now have to contest the first arbitration hearing since the formation of the Premiership ten years ago.

O'Leary had found himself in conflict with the club after he criticised the sale of Rio Ferdinand to Manchester United.