Gullit took over as Galaxy coach during the close season in November following the departure of Frank Yallop to the San Jose Earthquakes.
The former Holland international brought star credentials with him as the former Newcastle and Feyenoord coach - and one of the world's greatest players in the late 1980's - but he failed to turn around the fortunes of the commercially-driven Galaxy.
It is also thought to have been left frustrated by the limitations imposed by MLS regulations, most notably the salary cap.
Lalas was a highly influential figure at the club, the man who appointed Gullit and oversaw the club's policy of pursuing high-profile names - most notably that of Beckham, who signed for the club from Spanish giants Real Madrid in a landmark move for football in the US.
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