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The client was sued for $70,000 for a copyrighted image used by their designer. The client then sued the designer, causing a messy situation. The video provides advice on avoiding such nightmares, emphasizing the importance of having a solid contract template for web design projects. It is essential to consult with an attorney for legal advice on contracts. The video offers a contract template that can be customized to suit specific needs, providing a strong foundation for web design projects.