We consider a model of a single defendant and N plaintiffs where the total cost of litigation is fixed on the part of …-it-or-leave-it settlement offers, we can show that they will actually be exploited by one of their fellow plaintiffs rather than by the … defendant. Moreover, if litigation is a public good as is the case in shareholder derivative suits, parties may fail to reach a …

exist any verifi- able performance signal. It is shown that ex-post litigation can restore incentives of the agent. Moreover …, when the litigation can be settled by the parties the pure threat of using the legal system may suffice to make the …- uations where the agent is protected by limited liability, where the parties have different technologies in the litigation …