No, you pay it back on a pre-tax basis.
If you pay it back in the same tax year, your W-2 *might* reflect the lesser amount.
If you pay it back in a different tax year, you have to see how much you paid back. $3000 or less, it's only a schedule A deduction in the 2% section. If it's more than $3000, you can take the excess taxes paid in the earlier year as a "payment" (see IRS publication 525, "repayments.")
PS, 50-60% for taxes isn't a valid range. Federal's top rate is 35%, but an irregular payment is usually at 25%. States usuall toss in 5-7%, city might be 1% and FICA/MC is another 7.65%.
I don't personally know anything about the following website, but it has a forum of which lawyers (and consumers) may give their input. The forum is not as active as "yahoo answers" (and, just an fyi that the url/uniform resource locator is ".com" which usually means "commercial" or for-profit): http://community.lawyers.com/forums/96.a...
There are various consumer sites of which those who believe that they were mistreated, wronged or mislead can post their issues with the professional or business (though, usually anonymously). I'm not saying to do that, but here are a few such websites:
Here is another message board re: legal malpractice (though, it's also not as active as YA, and the url is ".com"): http://www.expertlaw.com/forums/forumdisplay.php?f=82 and the topic is in the "forums" under "accidents and personal injury law" is a "malpractice law" forum.