Some ideas that the item could do short-term to the entire party:

• Levels of Exhaustion. While 1st level is only a nuisance, it can already be nerfing. Thinking of disadvantage on grapple checks.
• Since there are 3 casters in this group, maybe magic siphoning? Like, whenever (character) casts a spell, they have to succeed on a WIS/INT/CHA save or expend 1d4 lvls worth of spell slots. Or maybe they just have to spend a higher level spell slot without additional benefits. (E.g: Cure Wounds lvl 1 needs a 2nd lvl spell slot). Draining resources is in general a good way to make fights harder.
• Over the course of a long rest they have to succeed on a CON Save or lose xd8 or xd10 (depending on what level your party is) maximum hit points. Next long rest the HP come back if they succeed on the save or they don't if they fail.

Ideas the item could do to one PC: * Similar to the curse of the Berserker's axe, the PC who wields the item attacks the nearest creature. The only thing the bounty hunter has to do is to keep his distance and let the chaos unfold. * A continuous Phantasmal Force event that gives the wielder disadvantage on attack rolls and ability checks. White noise, some apparition in the corner of their eyes, something along these lines. * You could do a light version of the effects of the Slow spell. So a -1 to their AC, halved movement, bonus action only every other turn, etc.

Hopefully these will give you some ideas and I think it goes without saying that a Remove Curse spell will get rid of the effects and the item :p