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The client was sued for $70,000 for a copyrighted image placed on the website by the designer. The client then sued the designer, resulting in a messy situation. The video provides tips to avoid such situations, emphasizing the importance of using a contract template for web design projects. It is important to consult with an attorney for legal advice on contracts. The video offers a contract template used by the creator for web design projects, providing a foundation for customization and legalities.