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In the video tutorial, the client was sued for $70,000 due to a copyrighted image used by his designer during website development. Consequently, the client countersued the designer leading to a messy legal situation. The video aims to offer advice on avoiding such nightmares by providing a contract template for web design projects. It is important to consult an attorney for legal advice when dealing with contracts. The template serves as a foundation, allowing for customization to include necessary legal details for a secure contract.