Birmingham City will pursue their claim for compensation after Alex McLeish was named Aston Villa manager on Friday.
The Scot resigned as Blues boss on Sunday, but relegated Birmingham are demanding £5.4m to cover the remaining two years of his broken contract.
A club statement read: "That Alex McLeish has been appointed manager of Aston Villa does not, in any way, mean the legal dispute is over.
"Birmingham City maintains its stance and will vigorously pursue the matter."
As well as demanding compensation for McLeish's contract, the St Andrew's club have previously accused their city rivals of "tapping up" the former Scotland manager.
The Blues also threatened to report Villa to the Premier League and take out an injunction to block the move and, although neither action has been carried out, they say the matter is not over.
"We are very disappointed with how the club and its fans have been treated by Mr McLeish given the way we have supported him over the years and we are still looking into whether Aston Villa's conduct has been in line with Premier League rules," added the club's statement.
"As the club is currently enforcing its legal right with Mr McLeish the matter is in the hands of our lawyers and it is therefore not appropriate to make any further comment at this stage.
"The club will continue its full efforts on recruiting a new manager and hope to make an appointment as soon as possible."
McLeish, 52, had been in charge at Birmingham since November 2007 and steered them to Carling Cup success in February but the season end in relegation.
Portsmouth manager Steve Cotterill has been linked with the vacant position at St Andrews.