You only need to pay a fee if you want the complaint heard by a three-member panel, instead of a one-member panel. If the complainant has already selected a three-member panel there is no fee to you for this.
Information on fees can be found here [domains.adrforum.com].
Did you receive a copy of the complaint yet?
If so, it will state the specific reasons why the complainant believes they are entitled to the domain name.
There are very specific elements of the complaint that must be true. If even one of them, for example "registered in bad faith" can be shown by you to be untrue, than you will [usually] prevail.
The process may look intimidating to you -- however there is a lot of information on the NAF website that can help you, and you can read links to other decisions that may give you information that you can tailor to include in your response. You *can* do it! ;-)
You may want to look around to see what attorneys experienced in domain name law cost. They will be glad to discuss costs with you upfront. Depending upon the circumstances (the value of the domain name to you, and your financial resources) you may want to retain an attorney to help with this.
edit: typo /edit
[edited by: Laker at 4:21 pm (utc) on Jan. 29, 2008]