Pity the average dwarven clan. They toil for decades, even centuries, in out-of-the-way mines deep in mountains, away from civilization, dealing with sudden dangers and unexpected discoveries.
Led by the tough matron Dalrun Blackaxe, after several decades of successful mining through rich veins of silver, the dwarves accidentally broke into a massive, labyrinthine crypt. Dozens of spirits swooped at them, but the ghosts' wretched wails inspired pity in the dwarves instead of rage. Rather than battle, they attempted to parley.
After a tense standoff, the spirits began to talk to their curious intruders. They explained that their complex housed the tomb of an old, evil king who had had many innocents buried alive in his catacombs when he died. Mistakenly assuming they would protect his bones, they instead grew enraged at his callous disregard for their lives.
Sensing an opportunity, Dalrun forged an alliance with the ghosts. The ghosts led the dwarves to the center of the tomb, the old king's resting place, which the ghosts could not enter. There, the dwarves disarmed the traps around the tomb, disinterred the king's withered body, and burned it.
Besides various valuable pieces of treasure, the dwarves retrieved a magical golden scepter that the king had held clutched in his folded hands. This scepter has 6 charges and regains 1d6 at dusk every day. When using the scepter, roll 1d6. On 2-6, the scepter casts the inflict wounds spell. On a 1, the scepter casts arms of hadar.
Doing this unbound the spirits from the crypt complex, allowing them to leave, and they agreed to follow the dwarves and serve them for the next thirty-three years as payment.
As a friendly faction, Dalrun sees this as a massive opportunity and has begun dramatically expanding the clan's activities. She sends trade delegations guarded by spirits to nearby settlements and dispatches groups to attack monster infestations within their mountain. PCs may be asked to guard or otherwise assist with a trade negotiation with Dalrun's dwarves, or may be hired by Dalrun as added muscle to drive out a particularly troublesome nearby tribe of goblins or kobolds.
As a foe faction, the spirits are not as benevolent as they appear. Centuries of hatred at their fate twisted them into evil, spiteful creatures. They put on a good front for the dwarves, but now that the spirits are freed, they have begun to subtly pervert the dwarves' attitudes, playing on their natural tendency towards greed by encouraging sentiments of revenge and entitlement.
Dalrun has begun expanding the clan as in the friendly version, but with more of an attitude towards building a new empire. And with only a few decades of time to do it before their deal with the spirits runs out, Dalrun uses the clan's considerable wealth and intimidating forces to bring a variety of nearby tribes under the dwarves' "protection." A new power is rising....
The art for this faction is from "The Battle for Middle Earth 2." I sadly can't find the name of the original artist.