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The client was sued for $70,000 for using a copyrighted image on his website, placed by his designer. He then sued the designer, leading to a messy situation. In this video tutorial, the speaker provides advice on avoiding such nightmare scenarios in web design projects. It is important to consult with an attorney for legal advice regarding contracts. The speaker shares their own contract template for web design projects, which can be customized to add necessary details and legalities for a strong foundation.