Although he was suspended from Labour's candidates list in 1977 in a housing allocation row, he returned to the City Chambers in 1980.
He also played an important role in the creation of the Glasgow Royal Concert Hall, which is sometimes dubbed 'Lally's Palais'.
In 1997 he and Alex Mosson were suspended by the Labour party in a "votes for trips" scandal.
Lally retired from local government in 1999, with one of his last public duties as Lord Provost being the opening of the Buchanan Galleries shopping mall which had been an integral part of the Concert Hall scheme he had presided over in the late 1980s.
He quit the Labour Party in 2003, but later that year stood at the age of 77 against Mike Watson in Glasgow Cathcart to be an MSP as a health campaign candidate, and stood again to be an MSP in the October 2005 by-election, against ex-council leader Charlie Gordon, as an independent for the same constituency.