If I was manager I would have explained that once someone threatens legal action all further communication about the incident must take place between the lawyers and it is policy not to have anyone in the store that may be pressing a lawsuit. I would have politely asked her to leave and if she gave any pushback or even asked a further question I would start walking towards the office announcing I am calling the police. If she still wanted to press her luck I would call the police and have her removed and trespassed.