Q. (cont.) and that law firm is cutting a check to another law firm who is representing the plaintiffs and they will be disbursing the money. Wouldn't I just issue the 1099 to the first law firm, not the second and the plaintiffs?
A. I spoke with IRS information agent Ms. Brown (ID# 10007902343) to confirm my suspicion on this matter. You are correct in that you will only issue a 1099-MISC to the first law firm for the amount you paid them.
When issuing 1099-MISC forms, you always want them to "follow the money." Basically, whoever disburses funds will issue the 1099 form(s) for that amount. This means that you will issue the 1099 to the law firm for the entire amount you disbursed. If they in turn distribute some of that to the other parties, they will issue their own 1099-MISC forms for whatever amounts they disbursed.