Seedorf was placed in the Milan hotseat in January after Massimiliano Allegri's sacking but was unable to sufficiently inspire the club up the Serie A table and they eventually finished eighth.
That was Milan's lowest league placing in 16 years and the former midfielder was removed from his role, paving the way for Filippo Inzaghi to come in.
Italian football clubs typically place departed coaches on 'gardening leave' rather than terminating their contracts, meaning Seedorf would need to be paid until June 2016 - when his deal was due to expire.
The club and Seedorf are reportedly in talks in an attempt to settle their differences, but Tiziano Treu, a member of the former Netherlands international's legal team, expects a long road ahead.
He is quoted by Gazzetta Dello Sport: "We hope for an amicable solution and [one] that satisfies both parties, but the last meeting did not go very well.
"As things stand there is a high chance we will end up in court."
Milan top Serie A after winning each of their opening two games of the season, including Sunday's thrilling 5-4 win at Parma.
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