if you went as far as 'threaten legal action' you better be ready to back it up. Legal action as a way of negotiation is low, for anyone.
People have tried to threaten legal action against me. All it gets them is a letter from my lawyer, a resignation letter, a final bill, and a list of things I will deliver after payment is made in full. 99% of the time I never hear from the client again. But if the client pays, then they get what they want.
You should have just left it alone. Client wouldn't get files, you wouldn't get final payment... but now you're in a bigger mess and wasted more of your time. Has it really been worth it?