Kevin Keegan will soon discover that the only winners in the saga of his departure from Newcastle United will be the lawyers. Keegan’s legal team was poring over the details of his contract with the club last night to make sure that it has a cast-iron case that could support a claim for constructive dismissal when it comes to negotiating a financial settlement.

The signs are that Keegan will be able to mount a strong defence against a counterclaim for £2 million compensation from Newcastle for breach of contract and pursue an action for damages, according to top sporting lawyers.

Matthew Clark, head of sport at Hextalls, the London law firm, said: “Kevin Keegan has a very strong case. He seemed to be in a position that was untenable and in which there was no mutual trust in the relationship between the employee and the employer. That could amount to a case of constructive dismissal.”

The posturing of the past few days, with Newcastle issuing statements insisting that they had not sacked their manager and Keegan taking his time before resigning, appears to have been merely a breathing space for both sides to decide the strength of their legal positions when they discovered that there was no chance of successful negotiation.

Keegan is believed to have a clause in his contract giving both sides the right to claim up to £2 million in compensation if either decides to terminate the contract early. This is the second time that he has stalked out of St James’ Park and Mike Ashley, the club’s controversial billionaire owner, wanted an insurance policy if his manager left in the middle of the 3½year deal.

While Keegan’s decision to resign is being viewed as a case of breach of contract, he is just as likely to argue that the job he ended up with – working under Dennis Wise as executive director (football) - is not the same one he was employed to do.