I was supplied an image by a client, used it on their new website and now I've received a letter from the image owners solicitor asking for £900.
Does anyone know my legal position on this?
I can prove it was supplied by the client (email).
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Unfortunately, you could be on the hook. Laws vary from country to country about how remedies to creative theft can be made (lawsuit, independently adjudicated, etc.), but most of the world abides by certain standards for fair use and creative rights through the Berne Convention and other treaties. If you are really interested, a short article with good references can be found here https://certificates.creativecommons.org/cccertedu/chapter/2-2-global-aspects-of-copyright/
In your case, though it seems a matter of fact already, so what do you do?
Lastly, remember everything is a negotiation; give a lowball number and go from there.