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MarchFirst hit by countersuit

The cash-strapped company has been sued by a client which alleges the Web consultancy did not deliver contracted Web development services.

Cash-strapped MarchFirst has been sued by a client which alleges the Web consultancy did not deliver contracted Web development services.

VCapital, an online resource for private equity and professional services, claims that MarchFirst was late delivering a project and that the services were "deficient, incomplete and not fit for their intended purpose," according to the lawsuit filed March 7 in Circuit Court in Cook County, Ill.

Because of this, the lawsuit said, VCapital has to pay another service provider to create its Web site, and at a later date than the launch date promised by MarchFirst. The lawsuit seeks $12 million in damages and up to $100 million in punitive damages from MarchFirst.

The lawsuit is a counter claim to a lawsuit filed by MarchFirst in January related to complaints over their agreement. A MarchFirst spokeswoman said the company does not comment on pending legal matters.

The lawsuit is the latest blow for troubled MarchFirst, which has suffered a series of problems including several rounds of layoffs, profit warnings, executive departures and a stock price that has plunged well below $1.

Last Monday, the company announced the abrupt departures of its chief executive officer, its chief operating officer and executive vice president. Like other players in the once burgeoning market for Web development and Internet consulting services, MarchFirst has had a difficult time adjusting to the rapidly changing times.

In the lawsuit, VCapital alleges that services provided by MarchFirst were "not performed in a professional and competent manner consistent with industry standards." VCapital also claims it had prepaid MarchFirst approximately $4.9 million for work not yet delivered under the agreement.

A source familiar with the situation said MarchFirst completed up to $10 million of work for VCapital and that the client, in turn, had not yet paid for services provided under the contract.