Avogadro6: I don't think it's at all possible to pay for his release, you have to break him out of prison. Find out where he is (it's mentioned in the quest info), find the jailor, talk to him and demand his keys, knock him out when he refuses, then get in and talk to the lord.
You can either tell him to help you fight off the remaining guards (he'll follow your commands) or tell him to stay put, in which case he'll wait patiently by the door (which is not necessarily safer, as he might be left exposed to archers etc). If the lord gets knocked out of combat you'll fail the attempt, but you can always try again.

It helps if, prior to entering the town/castle, you pay the villagers of a nearby village to start a fire as a distraction (choose the 200g option), this will lure a few guards away for a few hours.

Also, make sure you save before attempting the quest, sometimes it bugs out and the lord will turn hostile to you, forcing you to knock him off or worse, he might two-shot you out before you can react. Restarting the game will fix it, but if your last save was 2 hours ago, well...

alsal3: Thanks, too much risk for the reward.