Seek Out and Investigate the Fallen Paladins - BG2 Side Quest
Seek Out and Investigate the Fallen Paladins is a side quest that begins in the Radiant Heart building in the Temple District of Athkatla. If your party has 10 Reputation or higher when you speak to Sir Ryan Trawl he'll ask for your help and offer this quest to you. You'll need to remain at 10 Reputation or higher too throughout this quest.
You can find the group of Fallen Paladins that he is talking about in the northeastern portion of the Bridge District in Athkatla. A screenshot of their group is shown below. When you first find these Fallen Paladins they'll be fighting a group of Smugglers - you can choose to stand by and watch them or assist them with fighting the enemies. They will easily win this battle and don't need your help.
When the battle is over the Fallen Paladins will initiate dialogue with you during which they'll ask you to retrieve Anarg's Cup for them. For this, we'll need to return to the Radiant Heart building and talk to Sir Ryan Trawl a second time.
Trawl will not want to hand over Anarg's Cup at first but you can convince him. Before you return to the Fallen Paladins it's worth mentioning that having Keldorn in your party will change the outcome of this next part. It's recommended that you keep Keldorn far out of eyesight if you don't want to fight all of the Fallen Paladins. Although, fighting all of the Paladins will get you good loot, EXP and complete the quest. Keep that in mind.
When you return to Reynald and give him the cup he'll call his boss Anarg over. Anarg will ask you if you'd like to join the Fallen Paladins, accepting this offer will net you 7k EXP and result in Anarg along with every other Paladin here to become hostile to you and attack. Declining Anarg's offer will not get you any EXP and it will cause Reynald to leave but you'll still have to fight all of the other Paladins.
You should probably accept Anarg's offer as this will get you the most EXP and loot out of everything. Regardless of your choice once the Paladins have been defeated return to Sir Ryan Trawl once again to complete this quest.