Elf Witch said:
The whole reason the player picked a paladin was to try and coax the party to be more good. It is not working.
Then perhaps the paladin character, IC, should just walk. Then get on with the game with a new character.
I've had a number of my characters leave a group for a number of reasons. One Cyberpunk Nomad dropped out after making a big score. He wanted to spend his time and money supporting his clan. He poped up as a NPC at times. Sometimes, they reappeared. One made an appearance as a "another" character. The current party was an offshoot of the character's original party, so they knew of his old character, but didn't make the connection between the two. Another (not mine) slipped away with a kewl artifact that we had discovered, and he didn't want to share. He was a sneaky git, so we all kicked ourselves for not having been more careful, but congratulated the player on having engineered his theft and escape so well. Then he took a new character and we got on with it.
In a game I DM'ed, there was a Witch-hunter who really lacked the "conviction" to be one. So I shunted him out of the class, into a more generic fighter class. (I am not usually so authoritarian, but we had discussed it a couple of times, and the player realised that his character needed to change but had been unable to bring himself to it) The player was a little unhappy at first, but after some discussion, he agreed it was approapriate, and decided that IC, that the character needed to withdraw and seek spiritual guidance. In both cases the players ended up feeling proud of the way they had played the character, and that the character had been enriched.
I suppose my point is that leaving the party need not be seen as negative. I don't remember alot of what else some of the characters mentioned above did, but I remember these incidents quite fondly - as you can see.