Thanks so much for that extended analysis. It's nice to see someone who knows about the law. Also keep in mind that, IIRC, legal bills are not able to be written off federal income taxes, so a plaintiff who wins $X and then pays 1/3 $X to his atty still needs to pay taxes on the whole $X! Crappy law, write to your congressman.
Great point about the fees. Income to the US attorneys handling, and income on the settlement funds. So much for no double taxation!