...I mean as business models go it's not terrible.
1) If you're still torrenting at this point you're a lifer.
2) If you're still torrenting on public trackers you're a moron.
3) The illegality of what you're doing is common knowledge, beyond dispute, and fundamentally ignored by everyone. It's probably the only crime you commit.
4) You've always heard this happens to people and the best way forward is to settle lest you end up like Jammie Thomas.
5) So you pay your breaking point and offer up more incriminating info to a law firm that you can't determine if they even have the right to negotiate. Which you'd probably worry about if it weren't for point (2).
6) So now there's a law firm with the signed confessions of morons with disposable income and a database of who did what. Best bet is to have a few of them form another firm, hit the first firm with a discovery motion and milk the cow all over again.
YTS is most likely practicing entrapment but no one is going to sanction them for it. You could maybe get a class together to come after their lawyers but they don't have enough money to bother with either. If you could somehow indicate that the studios were behind this it'd be worth your time but that's a paycheck you'll never see so instead you've got penny-ante lawyers shaking down morons over the Internet. Dollars to donuts a large percentage of these letters are going to minors and an equally large percentage of these fines are being paid by their parents.