To set up his shop in the Gallows he had to bribe the city guards. In order to do this he went to Athenril, promising a share in his profits if they helped him secure his spot.
When Hawke arrives in Kirkwall they must work for Athenril or Meeran so that their group may enter the city. If Hawke decides to help the smugglers, Athenril will inform them that Cavril refuses to deliver what he promised her and sends Hawke to collect.
The player then has a choice to: Receive a bribe from Cavril, fight his guards to force him to pay, or have either Hawke or Aveline intimidate him.
Either fighting his guards or Aveline intimidating him will force Cavril to pay Hawke what he owes Athenril. Taking a bribe from him will force the player to go to work for the mercenaries because the smugglers will not take anyone who has double-crossed them.