Our party has a Lawful Neutral Oathbreaker Paladin that has been very much a murder hobo from the beginning. We have been able to keep him in check in most cases but in our recent session he went off on his own and went full murder hobo.

We encountered a hag in the woods but she never attacked us and let us all go. When we got to the next town he went off on his own to ask about it. They said that she protected the town and was allowed to stay in the woods. He decided this made them all evil by association and stabbed a clerk and threatened all of their lives. Due to the number of guards called against him he backed off but had fully intended on killing everyone in that building.

He managed to escape on horseback and rejoin the party without any of our characters knowing. We all expressed our displeasure with him about his actions out of character but he argued that he was playing in character and refused to see our side.

What should we do about this? Our DM is debating changing his alignment and possible consequences later but is unsure what to do.

Don’t argue with him about his character, argue with him about the game itself

He is never going to agree that his character would or should behave differently, or that what he did was bad roleplaying, or that what the rest of the party wants is what his character would or should have done. As far as he is concerned, he is the world’s sole expert on what his character would or should have done in any given situation, so nothing you say has any relevance. What’s more, he is basically right about that. There is no particular reason that an oathbreaker paladin, especially an oathbreaker paladin, couldn’t act in this fashion. It is entirely plausible for such a character to exist and behave in this manner, and it is the player’s right to decide that his character is such a character.

What is a far more productive avenue for discussion is the kind of game you want to play, and the kinds of characters you want to play. If you, the players, are uncomfortable with this character, that is diminishing your enjoyment of the game, and that is unquestionably not something this player is entitled to do. You can frame this as a social problem (“we are not comfortable with this kind of behavior”), a gameplay problem (“this is interfering with the aspects of the game we want to embrace and enjoy”), or a roleplay problem (“we cannot figure out how to justify our characters continuing to associate with your character”). Any, or more likely, all of these is true, and valid, and a problem this player needs to deal with. He is ruining the game for everyone else—him, not his character.

And then make him read the fantastic advice we have collected about how to get along with the group and prevent “My Guy” from interfering with everyone’s fun. The top answer is phenomenal, as are several others. The links to JD Corley’s contributions to this discussion thread and to Rich Burlew’s excellent Making the Tough Decisions should, quite frankly, be required reading for everyone who wants to play an RPG. This player needs to learn, in particular, how to “Decide to React Differently” as Burlew puts it.

Technically there is nothing incorrect with how he is playing

As hard as it is for many to understand, there is not a single way to play this game. Unfortunately, the way he is playing can be disruptive to the other players in their expectations. You can start with out of character realignment of expectations or you can start tempering behavior with in game solutions.

I stopped playing with a friend that did this sort of thing all the time but how I started handling it was all done in game, because none of us could convince him that we were not having fun with his play style. During the last one I played with him his character hired assassins to join the party and eliminate key members of the party so that a balance of alignments were represented during the fight for the survival of the world. Perfectly within his character's motivations.

One thing that many players and a lot of DMs seem to forget is that the players are not the only people in the world. There are other adventurers, there is law enforcement, there are powerful mercenaries, wizards, clerical organizations, extraplanar beings and the list goes on...

Point is that if the character is causing issues in a community and has a reputation of doing so word gets out to other communities, bounties are placed on heads, upstarts try to rid the world of such evil themselves (because from another paladin's, cleric's, or whatever's point of view this character is corrupted or evil themselves). The world in which your players play should feel a bit immersive, actions have consequences. Someone breaks the law they can be apprehended and punished by the local magistrate, or vengeance can be dealt by a survivor of a pillaged town that the character had a hand in.

This has been my go to for quite a few years. Sometimes the character survives and continues but in that case usually the other characters in the group get tired of being guilty by association and remove the offending character from their midst or in one case they actually collected the bounty themselves.

Lawful Neutral PC's don't go on murder sprees.

Just sayin'. While Alignments aren't exactly a rule on how a player should act, they are actually more of a guideline. However, when a player behaves in a contrary way to that guideline, they need to change it.

Looking at it from another direction, your alignment could also be your "reputation". A Lawful Neutral character is someone seen to uphold the law, regardless of whom is following or breaking it. If a child steals a loaf of bread, they must pay the price. If a Hag is helping, and protecting village, that is itself a righteous village, they aren't breaking any laws, regardless of their implied alignments. They aren't causing harm, and therefore are not breaking any laws; and by extension, neither are the townsfolk.

If a Lawful Neutral Player decides then that an entire village need be punished purely for associating with an apparent "evil" creature, their reputation, and therefore their alignment, needs to change. This Paladin - an apparent upholder of the law and protector of the righteous has just threatened to murder an entire village, effectively. Doesn't really matter who you are - that's evil. And what's worse, he didn't do it because they were breaking the law; he did it because he wanted to. This guy is of the hinge.

That said, Chaotic Evil is probably a bit extreme. Instead, I would suggest pushing their alignment one step each time they do extreme things like this, and then treat them as if "word has spread of his misdeeds". His actions have earned him a reputation. Taverns don't want to treat his kind. Soldiers refuse to give him information, and instead spit, or threaten to throw him in jail if he doesn't clear off.

You can enforce this by discussing this behaviour with the rest of the group: should alignment be treated the same as reputation, and grant you a response from NPCs based on that reputation? By treating the whole party this way no one is being "picked on", and the simple solution, that if they don't pick up their act, they'll be treated in kind