What can a landlord do about late deposit protection claims?

As a landlord I can’t really excuse the fact that I didn’t protect the tenants until four years too late, there were reasons at the start of said tenancy that distracted me and I only realised now having needing to serve a S21 to get out of the market before the new RRB.

It’s now protected sitting safely with MyDeposits. S21 served. However the tenants have realised about the late protection after serving them a S21.

We’ve been contacted by a No Win No Fee solicitor asking for deposit x 9!!! Plus the legal return of the deposit.

To cover the first tenancy, the rolling tenancy and PI not prescribed.

My head is literally spinning, they don’t seem to be willing to budge and happy to allow it to go to court for a judge to decide and have implied I will be liable for costs too.

I’ve made an offer of 2x to cover everything, plus the return of the deposit and it’s been rejected.

Thanks,

Sarah