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no project contract was signed - I was naive and had met her through a mutual friend, so I thought I could trust her and we could save some money.

There is a contract for the company set and equity structure.

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Then write up a legal agreement that says she must be with the company for "x" years to earn the equity. Add in a little extra incentives for signing it ("Dual monitors!"). Once she signs it, fire her.

Regarding legal costs, I've used Pre-Paid Legal's Small Business Plan for a year. It costs $69/month and they do all sorts of stuff (and things like contract review are free). It isn't perfect but it has saved me the hassle of, "Should I sign this? Should I do it like this?" since I no longer have to worry about money when it comes to important legal decisions. URL: http://wserver0.prepaidlegal.com/legalzoom/SBpage2b.html

It doesn't matter if a legal contract was signed. As long as you undertook this venture with the agreement (verbal) that each person owns a part of the business, than it's the same as forming a legal partnership. Though, it wouldn't be useful to sue her unless you guys specifically agreed that she would finish the work, etc...

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