Blake Lively and Justin Baldoni began their off-screen relationship with a closeness that some insiders now describe as "too friendly," sources revealed.

While the pair's professional collaboration on the 2024 film "It Ends With Us" generated plenty of buzz, their personal dynamic quickly drew attention — long before legal battles arose between the two.

A 2023 voice memo from Lively revealed she addressed Baldoni "as a friend more than anything," a level of intimacy that, according to insiders, blurred professional lines.

"They weren't just co-stars. They were very friendly. Some would say... too friendly," one source told Rob Shuter's Naughty But Nice.

Another added, "That level of emotional openness early on blurred lines, especially in a professional power dynamic."

During filming and promotion, Lively and Baldoni shared a warm and informal connection, contrasting sharply with the coldness that followed after disputes over alleged misconduct surfaced.

Sources noted, "There was a comfort there that later became part of the problem. Once things went sour, everyone started reassessing what should — and shouldn't — have been shared."

The Intimate Early Dynamics

Before the public fallout, Lively and Baldoni frequently communicated outside of work.

According to insiders, "They were texting, voice-noting, checking in — not inappropriate, but intimate." When trust in such setups collapses, "it gets messy fast," one source said.

The actors' friendship, initially seen as supportive, became entangled with legal and financial implications after Lively filed a sexual harassment lawsuit in December 2024.

Baldoni, who directed and starred in in the movie, denied the allegations and countersued for $400 million — a countersuit that has since been dismissed. Lively claims she lost $161 million as a result of what she describes as a retaliatory smear campaign.

Settlement Conference Ahead of May Trial

The legal dispute is gradually heading towards a possible settlement, as a court, directed settlement conference has been set up for Feb. 11 in NYC at the U.S. District Court for the Southern District of New York.

Lively, Baldoni and their lawyers will be meeting under the direction of U.S. Magistrate Judge Sarah L. Cave.

Legal expert Gregory Doll told PEOPLE that settlement conferences are designed to explore whether a case can resolve without going to trial.

"All statements are 100% confidential and cannot be used at trial," Doll said, emphasizing that the discussions will remain private.

The conference is expected to last a full day, with the judge using breakout sessions to highlight potential weaknesses in each side's case.

Doll explained that the goal is often to show parties the financial and public relations costs of trial, encouraging a resolution.

"These types of settlement conferences are court-ordered, so we're not able to infer anything about the strength of either side's case based on their participation," he added.

In case of a disagreement, the following steps will be pre-trial motions and trial proceedings, scheduled for May 18. Doll observed that most of the civil cases actually get settled at this point as parties get tired of legal costs and public scrutiny.

"I think it is going to have to involve the payment of some amount of money to Lively... I think it is unlikely that the parties are going to do a walk away deal where neither side pays money," he said.

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Blake Lively