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The client was sued for $70,000 for using a copyrighted image on their website, placed by their designer. The client then sued the designer, leading to a messy situation. The video provides tips on avoiding similar issues, emphasizing the importance of having a solid contract in place for web design projects. The speaker clarifies that they are not a legal expert and advises consulting with an attorney for legal advice. The video offers a contract template for web design projects as a starting point to ensure legal protection.