Two thugs, (The names of the thugs are drawn from a random pool, apparently), are threatening a small human boy in an alley next to the player residence Inn in The New Foreign Quarter. If you do not leave when warned they will become aggro (scaled to your level) and attack!
After he is safe, the boy, Matteus Gaines, will speak with you about conditions in the city, and send you to speak to the city ambassador.