Hi again George,
My guess would be that that if the sub-contractor was going to pursue this through the courts, it would be allocated to the small claims court route. This is not the same as the normal county court small claims route where your contract case will be dealt with, although the aim is for the procedure to be equally simple and straightforward. The copyright small claims track is handled by the Patents County Court which is normally based in London, although it can sit in a number of regional courts if that is more convenient for the participants. However since the PCC tries to dealt with as many cases as possible on paper and without oral hearings, it doesn't matter where the court is.
The major advantage as far as you are concerned is that if this claim does come to court, it may cost you very little more than your time. You don't need to be represented by a barrister - indeed as with the normal small claims route, this is discouraged as it tends to slow down the process. Only the claimant needs to pay a fee (which start at £35, depending the value of the claim) to initiate proceedings. Assuming that the case makes it past the first hurdle and isn't thrown out for lack of merit (highly possible in this case, I suggest) then you will be required to present your side of the matter, on paper along with any documentary evidence to support your defence. You can consult a solicitor for help with this, but it's not strictly necessary. Unfortunately you can't get legal aid for this, and since you are running a business the CAB will not be able to assist. However you may be able to get some advice from your local chamber of commerce or Round Table etc.
Solicitor's fees vary very widely so I can't really give a steer on that. If you do consult one, make sure they have commercial experience preferably with IP matters. And ask for a quote before giving instructions. Don't expect to pay under £75 -100 per hour for a reasonably experienced lawyer outside London.
But as I mentioned, you probably won't need this kind of professional advice. Just present your case in a clear and logical narrative, answering all the claimant's points and the matter could well be determined on paper without a hearing. There may well be a preliminary case management conference, which if you and the claimant live outside London, can be done in a telephone conference call. The aim of this is pick up any loose ends and make rulings about whether either party needs to disclose additional paperwork or other details etc.
As the Patents County Court Small Claims Track only started in October of this year it is too early to say how efficient it is or how quickly cases are dealt with. Cases that go to the normal PCC or the High Court can be listed many months ahead.
And if the worst case happens and you lose, you should not pick up more than £260 of the legal and other costs of the other side, together with whatever damages the court awards which cannot exceed £5000. The flip side of this is that if you win, you will not be able to recover more £260 from the claimant for your costs.
So to summarise, I doubt if the copyright claim will actually make it to court, especially if the contract matter is settled in your favour, and if it does, the procedure is not significantly more daunting or formal than the normal small claims court route.
You can find a good deal more about the Patents County Court Small Claims Track via Google, or take a look here: http://nipclaw.wordpress.com/2012/10/12/how-to-bring-a-small-claim-in-the-patents-county-court/
I hope this re-assures you.