It's a bit of a sorry "welcome to WebmasterWorld" but the truth is we cannot possibly answer your question in any meaningful was without a) a great deal more specific information; and, b) law degrees and licenses likely issued by the controlling jurisdiction.
It's also true that anything you might publish here to "present your case" could very likely be used against you in legal proceedings.
As a matter of forum policy we don't allow threads to run where people seek specific legal advice. What makes the enforcement of that rule even more compelling is your advice that "the other side" has already retained legal counsel.
At this point I must advise you to seek private legal counsel in the jurisdiction that will be likely be chosen to resolve this issue.
This thread is now "locked", meaning that no further replies will be made.
Talk to an attorney. Immediately. Do NOT post any further details in public forums unless you are prepared to have an attorney or judge advise you that you have hung yourself on your own words. It could cost you dearly in some cases, so seek private, confidential legal advice.
Good luck.