The lawyers pay tax on what they keep.
For tax purposes, you are considered to have received the entire amount. But you may deduct the lawyers fees you "paid". Unfortunately the lawyer fees are only deductible as an itemized deduction, subject to the 2% of AGI threshold.
Reference: https://www.lawyers.com/legal-info/taxation/tax-audits/are-attorneys-fees-tax-deductible.html
