The issue of your pay for your work is a contract issue. If you had a contract you need to look at that, if not, general contract law will apply.
If this person is interfering with your business you have a legal cause of action known as tortuous interference.
If you are getting threatening letters from a lawyer, then you need a lawyer to present your side.
All in all, my best advice for you is to hire a lawyer to represent you.
This post is provided for general informational purposes only and is not intended to be legal advice specific to you. This general information is not a substitute for the advice of an attorney in your jurisdiction. The attorney client relationship is not established by this post.
You should find an attorney who can advocate for you. In some states it is a civil cause of action if someone is interfering with your business. Also, defamation might be an issue to explore with your lawyer. Contact a civil attorney. That would be my recommendation.
This is not legal advice: it is intended to be used for general informational or educational purposes only. For a free case evaluation, visit FairfaxCountyCriminalDefense.com.