Here is my take, off of memory from classes a number of years ago. You will want to research further no doubt.

It appears that these legal fees would be considered "For the production of income"

Unfortunately I think the amount received will need to be reported as other income, and that the attorney fees are a miscellaneous itemized deduction, (and of course, Miscellaneous Itemized deductions, are no longer allowed on federal returns.) Worst of both worlds.