As with running any business, there is always the risk of legal issues arising. One common occurrence is the loss of images due to card malfunction. A client who has their images lost can spell big legal trouble. If you are not protected such as with a photography contract, clients may have the legal authority to come after your finances and even personal assets.
Sadly most photographers have to carry a handful of release contracts. If you run a business or if someone tries to sue you, for the fact that a photo of them was published. This could save your name.