I received a settlement for a personal injury/sickness claim and was wrongly issued a 1099 and W2.

I received a settlement for a personal injury claim (my contract was not renewed, I was paid through the end of my existing contract). I understand that this money is not taxable, however the way the company settled is, based on my reading of the IRS audit manual for this is wrong (and I gave them a copy of the IRS audit manual with the relevant parts highlighted).

They sent a 1099 and a W2 (despite I was not owed any back wages). The 1099 included the attorney fees although they issued one check to me and one to the attorney. What the heck can I do about this?

I think after entering the 1099 I can then, on a separate line, enter the same amount but with a minus sign and an explanation. But that doesn't solve the W2 problems and I am not sure what the deal is with the attorney fees. Even though this is personal injury/illness do I have to pay taxes on the attorney fees?

I read the IRS tax audit document and I think I can only deduct a percentage of attorney fees based on the percentage of the taxable, vs non-taxable. Since the company's attorney illegally 1099'ed me and gave me a W2 even though I was not owed any back wages I am not sure how to handle this. Is there any way to put a minus sign with entering a W2 like I was told to do (and is this correct?) with the 1099? If I am basically stuck with the W2 then is part of the 1099 money for the attorney taxable anyway? My reading of the audit manual is that I figure the % of taxable of the settlement and the same % (taxable) of the attorney fees can be deducted. Is that correct?

Summary:
If they had done this correctly - eg no 1099 and no W2 then I know I can't deduct any attorney fees. Since I *think* I can undo the 1099 (enter a second time with a minus sign), then I think I can deduct only a % of the attorney fees. Do I have to enter all the attorney fees amount as taxable income despite this due to injury/illness? Can I somehow undo the W2 since I was not owed any back wages?

Also can I report somewhere the attorney firm my company used for refusing to follow the law in how they issued checks? We argued about this because they said they had been audited once and didn't want to be audited again so this was how they were doing it - all taxable take it or leave it. Since they did this wrong they should be audited again. How do I report them to the IRS? Is there some sort of oversight board for attorney's that I can report that this one/company deliberately ignored the IRS audit manual and did what they wanted to do instead?