Attorney's fees related to a civil lawsuit may be tax deductible in certain situations. In general, attorney fees are deductible when they are incurred relating to profit or loss for a business. For example, the cost of hiring a lawyer to defend a patent or negotiate a contract is a deductible attorney fee, since these expenses are ordinary and necessary for the production of income.
However, legal fees associated with personal matters, such as divorce or custody of children, are not tax deductible since they are not considered ordinary and necessary business expenses.