The lawsuit, filed last month in the U.S. District Court for the District of New Jersey, alleged that certain Lawson business applications TeamStaff purchased last year did not work as promised.
Under the terms of the settlement, TeamStaff will return the human-resources applications it licensed last August, but will keep its licenses for Lawson's bookkeeping software. Financial terms of the settlement were not disclosed.
"Whatever challenges we had we have mutually agreed to put them behind us and go on to other things," said Donald T. Kelly, vice president and chief financial officer of TeamStaff in Somerset, N.J.
TeamStaff had planned on using Lawson's human-resources application in its HR outsourcing services business to communicate with its clients over the Internet and provide more efficient service. Lawson's HR software is designed to help companies automate payroll, recruiting and other staffing tasks.
TeamStaff, which provides HR outsourcing, payroll and temporary staffing services, said in July that it had struggled with the software for about six months before filing the lawsuit, which alleged that Lawson's software did not meet specifications agreed on in the contract.
The lawsuit also alleged Lawson knew its software did not meet the contract requirements at the time it signed the deal and then refused to provide software with the features it had promised, violating the New Jersey Consumer Fraud Act, which provides for triple damages and the recovery of attorneys' fees.
TeamStaff plans to begin installing the Lawson bookkeeping software early next year and is currently evaluating HR applications from other software companies, said Kelly.
Lawson, which went public in December, would not comment on the terms of the settlement or how it would affect the company's finances. Amid declining demand for business applications, the company's shares have fallen from more than $17 a share in December to around $4.70 a share.
"We are pleased we reached an amicable agreement with TeamStaff," said Lawson spokesman Terry Blake. "They are still a customer of Lawson's. We look forward to working with TeamStaff on the financial solution that it has licensed from Lawson."
Business applications of the type provided by companies like Lawson, SAP and Oracle among others are often complex to set up and can cost millions of dollars. Project complications have led to a number ofover the years. Oracle, SAP and PeopleSoft have all battled lawsuits from disgruntled customers.