In the Sunday paper, there was an article about a woman who was awarded $300k in a lawsuit. After some post-trial hearings, her lawyers were awarded $850k (these numbers are going from memory). Because the award was not for actual damages but punitive, the IRS says she owes taxes on what she received as well as the lawyer's take. This tax burden is more than her share of the award.
Trial lawyers and the IRS are BOTH screwed up.