Destroying his phylactery is pointless unless you are prepared to kill him. If you destroy it without being prepared to kill him, he can simply make another one. Normally an undead who is destroyed cannot be returned to unlife by any means. A lich is the exception to this rule. He is immortal and will always return to unlife unless his phylactery is destroyed. So holding his phylactery hostage is an effective means of ensuring he doesn't become your enemy. And if, as you say, he isn't an evil lich, I'd think there has to be some means by which your characters can get along.