Co-Plaintiff Cost and Recovery Sharing Agreement

What a good one includes

• A detailed breakdown of how upfront costs, such as court filing fees, process server fees, and subpoena expenses, are split and when they must be paid.
• A clear, mathematical formula for dividing any recovered funds, specifying whether splits are based on flat percentages or proportional to individual damages.
• A designated decision-making mechanism that outlines how settlement offers will be evaluated and whether unanimous consent is required to accept a deal.
• A division of labor clause detailing which co-plaintiff is responsible for maintaining evidence, tracking court dates, and managing communications with the court clerk.
• A withdrawal clause specifying the financial penalties or loss of recovery rights if one co-plaintiff decides to drop out of the lawsuit prematurely.
• An agreement on how to fund and manage the collection process if the defendant refuses to pay the judgment willingly.

Common mistakes to avoid

• Failing to decide beforehand how to handle settlement offers, which often leads to one plaintiff holding the other hostage over a reasonable cash offer.
• Forgetting to budget for post-judgment collection costs, leaving one plaintiff to shoulder the expensive burden of wage garnishments or bank levies alone.
• Defining the recovery split vaguely without clarifying if the division applies to gross settlement amounts or net proceeds after deducting court costs.
• Assuming an automatic fifty-fifty split without accounting for situations where one plaintiff suffers vastly more financial damage or contributes significantly more evidence.

Frequently asked questions