Need Help, Dog Bite?

In August 2006, about 2 am in the morning, we received a phone call from our neighbor stating that our dog was off his leash and out of our yard. Our neighor came into our backyard, got the dog chain and chased our dog into our other neighbor next doors yard where our dog 'supposely' nipped him, he then left the yard went home and called to let us know that he had tried to catch the dog for us, but the dog had bit him. We asked if he was okay did he need medical attention, etc., he said no..that he was fine, no big deal the dog just nipped him. We talked to him later about a week I suppose and still he said it was no big deal, as far as we know...he never went to the dr or received any treatment for the "bite". Here is my question...yesterday we received a letter from his attorney that he has received serious and lifelong damage regarding this situation> we really don't know what to think, we rarely see this neighbor but have never had any prior problems with him or anyone else. What burden of proof does he have to prove, I mean this has been 8months ago, never a word since a week after when we asked how he was, etc. Our dog...who does once in a blue moon get out...maybe twice a year has never given us reason to think he would act this way, he only gets upset when a stranger enters our backyard. We have three kids, and we would never have what we would think of as a dangerous animal. He's a mutt, if that matters, we picked him up a pup he had been thrown out and was starving. He is a bigger dog maybe not as big as a lab. Thanks for any insight you may provide for us as we are at a loss and I mean a total loss over this, we never suspected a thing or that it was a serious thing. Thank You

Ask him to provide you with the information about what harm occurred. The letter is meaningless if no real harm occurred.