Ser Cauthrien is a knight and Teyrn Loghain's most trusted lieutenant.
Background
As a youth she helped Loghain in a fight against bandits, not realising who he was. Loghain was so impressed with her actions, he took her into his service.
Involvement
Towards the end of the game in Denerim, after The Warden rescues Anora, she confronts the party. The player character can either surrender or attack. If you are successful in fighting her, The Summer Sword is gained. If you surrender or simply lose the fight, you will be taken to Fort Drakon as a prisoner. If this happens, she is met again at the Landsmeet. It appears she wishes to fight you to stop you from interfering with Loghain. However, it is possible to persuade her to let you by without a fight. It seems even she has seen the corruption of Loghain.
Strategy
Cauthrien is one of the toughest adversaries in the game. To prepare for the optional battle following Anora's rescue, a large number of health poultices are crucial, and it is strongly recommended that The Warden's party has a mage with healing skills and lots of lyrium potions. It would be helpful to have the others act as close-range fighters. Ser Cauthrien will have several guards and a mage backing her up. Ser Cauthrien is a heavy hitter so dispatch her as soon as possible. Keep the party's healer out of the range of the archers to avoid them being injured.
The Warden's party is heavily outnumbered, so do whatever possible to even the odds. An example strategy is to use one mage to cast sleep/mass paralize on archers, kill Cauthrien's mage as soon as possible and use another mage to focus on Cauthrien: if hex spells are available, debuff her and allow warriors to finish off her and her sidekicks quickly; Death Hex and Misdirection result in a significantly quicker demise. After tackling the key opponents, the enemy archers should pose few problems.
An alternative strategy is to use a combination of sleep and taunt abilities to separate Cauthrien from her troops (though such extra tactics are often unnecessary, since simply running back down the hallway and entering one of the rooms as soon as the fight starts will be sufficient to isolate Cauthrien, and doing so prevents your party from being exposed to unnecessary damage from archers and her mage). As well as characters with the relevant abilities, the party should also have an archer. Cast sleep on Cauthrien and the guards and make your party escape into the library. After you're in the library, wait for Cauthrien. You will notice none of her guards are pursuing you with her. Now, use the character with the taunt ability. Taunt her into running after you so that you will keep her away from your party who are busily unloading bolts and arrows at her. Run around the library and then use taunt again. Keep doing this until she is killed by one of your party's arrows. A quicker method would be to simply freeze her with Cone of Cold from one of your mages, and simply let your melee characters hit her until she goes down, and have your support mage heal as necessary. At that point, her guards should be more easy to defeat.
If you surrender to Cauthrien or attempt to fight her and lose, she can be fought once again right before you enter the Landsmeet, when she attempts to stop you from interfering. At this point, she will only have a few guards with her, and may be an easier fight for those who do not wish to face her at the Arl of Denerim's estate (although in this situation, you will have to face her and her guards at the same time, since you fight in a small room). Fighting her in the Arl of Denerim's estate may still prove to be an easier battle, provided you are able to isolate her.