The lawyer may be wrong, and it's not uncommon for the lawyer to be wrong either. Most lawyers are not that well versed in tax law, unless they are a tax attorney. The deductibility of legal fees depends on what the settlement payment was for.
The bottom line is, since the IRS has a copy of that 1099-MISC, you have to report it exactly as printed. If legal fees are deductible, that's dealt with elsewhere in the program. So what was the settlement for? Knowing that, I can help you determine if your legal fees are "in fact" deductible or not.
Also, I need to know what boxes have dollar amounts in them, so I can assist you in entering the data correctly into the program. Otherwise, you'll do like most do and end up reporting it as self-employment income which generates a SCH C and results in additional self-employment tax on that income. You don't want that, since you did not receive that money for providing products or services while in business for yourself.
