The former chief executive of ISME, the small firms lobby group driven by internal fighting, is understood to have begun legal proceedings in an attempt to be reinstated in the organisation.

Mr Mulcahy was sacked by the board of ISME Ltd last Friday. The directors had previously said they were terminating his contract - giving four months notice - but dismissed him at the weekend.

It is the culmination of a series of rows, claims and counter-claims within ISME. Mr Mulcahy accused the board members - who include businessmen Mr Eoghan Hynes, Mr Terry Hobdell, Mr David Dixon, Mr Seamus Butler, and Ms Irene Bergin - of a campaign of vilification. He said he had also taken legal advice on what he strongly believed to be defamatory statements "by both named and unnamed board members", which had caused "grievous hurt" to his family and himself.

The National Council of ISME is to meet today to approve a new constitution, which will see the current board expanded. It is thought that Mr Mulcahy's dismissal will be a topic of some debate. Some members have already warned the board that they would hold them personally liable for any costs incurred by ISME over legal action by Mr Mulcahy.

ISME chairman Mr Seamus Butler confirmed that Mr Mulcahy's contract had been terminated. He said he was happy that the rules of natural justice had been applied. He would not specify why Mr Mulcahy had been dismissed. He said Mr Mulcahy had been invited to a meeting to hear the allegations against him, but had not attended.