I cannot figure out why the 38 was reduced in power after the 1970s.
I have theories, but no proof. Lawyers do figure in, but not directly. I think its a result of the new "more accurate" way pressure is being measured, and the discovery that in many cases the pressure read using "modern"methods is higher than what it was thought to have been. Where the lawyers come in is in the decision to stick with the old system's pressure NUMBERS as the pressure limits.
For example if the old limit was 17,5k and new measurement shows that load to actually be 19K new ammo is loaded to show 17.5k under the new measurement system.
This might not actually be what's going on, but I think it might be, though I have no proof.
I also think the reason why the .357 was reduced to what it is today, its so it could be used out of small frame guns without beating them to death immediately. I could be wrong about that, too, but it fits the reality...