Lars' and Rhen's relationship started off as Master and Slave. They loathe each other. He bullies Rhen and does not care if he kills her (as seen in Ghalarah when he used magic on her, breaking the slave bracelet on her wrist). He even goes as far as to change Rhen's name to Peta (the name of his friend's dog).
When it is revealed that Rhen has the power of sword magic, she is sent to attend the same school, Shadwood Academy, as Lars. Dissatisfied, Lars vowed to make her life at Shadwood miserable.
And he did.
Lars spread the rumour that Rhen became a slave because she was a thief. When Rhen passes her trials, Lars spreads another rumour that she only passed the trials because she cheated.
When Rhen is sent on her quest, the Empress refuses to let her go alone, prompting Lars to volunteer, much to Rhen's dismay. Rhen confronts him about this, asking what he was up to and why would he volunteer to accompany her when he clearly didn't like her. Lars tells her that he just couldn't allow a slave to do such an important job. He also adds that when he is High Sorcerer he would make sure that no "slave trash" was allowed into Shadwood Academy ever again. Rhen replies by saying if she were High Sword Singer, she would make sure slavery was banned.
As the game progresses the hate between the two of them turn into something of a friendship. They are constantly seen discussing and agreeing on things. Lars also becomes a better and kinder person (he said the poor people of Dirkon were better off with the gold egg-laying of the Ikari goose than the party was) and starts condemning classism and the elitist (as seen in the conversation before joining the Elite Mage guild). Rhen is shown to be amazed at these changes and praises him for it. Later in the game Lars also becomes rather protective of Rhen (as seen when they first encounter the dragon).
In Sedona, Lars apologizes to Rhen about how horrible he was to her in the past.
On the other hand, Rhen tells him that she used to hate him but seeing as he's changed so much since they started their journey, she thinks she could almost like him, to which Lars replies by saying that Rhen is not so bad herself.
In Build C, Rhen is able to speak to Lars before making her decision. In the conversation Rhen is unsure of what to do and Lars reminds her about being High Sword Singer and abolishing slavery back in Veldarah. Rhen remembers and suggests that he could help her.
If the player chooses to head back to Veldarah (this option is only available in Build C), Rhen and Lars become Instructors at Shadwood Academy, where they teach for several years. After a few years they are raised to High Sword Singer and High Sorcerer, where Rhen worked tirelessly to abolish slavery.
It is also hinted that Rhen might have married Lars at the end.