The problem is it's a class action against the government that the people elected. The victims are both the petitioner and the defendant. Regardless of the amount paid, the only beneficiaries are the lawyers.
I think you might be failing to take into account that the population of Flint (the ones getting paid) is slightly less than 1% of the population of Michigan (the ones paying).
It is essentially equivalent to a retroactive insurance system. It is as if everyone in Michigan had been required to buy "State appointed manager mishandles water system causing lead poisoning" insurance, and Flint is now having a claim paid under that insurance.
"Regardless of the amount paid, the only beneficiaries are the lawyers."
If government destroyed your house through negligence, say military plane dropped a bomb on it, would you want to be made whole, or would you still believe that "the only beneficiaries are the lawyers"?
It is essentially equivalent to a retroactive insurance system. It is as if everyone in Michigan had been required to buy "State appointed manager mishandles water system causing lead poisoning" insurance, and Flint is now having a claim paid under that insurance.