Liam arrived in L.A. in search of his biological father. He worked as a computer repair technician, but he also accepted an internship in Spencer Communications' IT department. While fixing Steffy's computer, Liam accidentally recorded a conversation between Steffy and Ridge regarding Brooke and Oliver's sexual tryst. Liam was horrified when Justin sabotaged Steffy's tribute to Brooke by inserting the recorded conversation into the video, and Brooke and Oliver's affair was exposed during a press conference.

Steffy was blamed for the scandal, and she begged Liam to help clear her name, oblivious that he had been involved. Stephanie figured out the truth and forced Liam to admit the truth to Ridge. As Ridge was about to hit Liam, Liam blurted that he was Ridge's son. Ridge slugged Liam and threw him out of Forrester Creations. Liam rescued Hope from some pesky reporters outside the building, and the pair bonded. Liam declared his interest in her, and he and Hope shared a kiss, but she was still hung up on Oliver. Hope and Liam formed a close friendship, and he confided how alone he had felt since his mother had died.

Bill and Liam clashed when Forrester Creations threatened Spencer Publications with a lawsuit, and Bill fired Liam. Word spread that Liam intended to find his father, and Thorne and Bill both realized that they were possible candidates. Bill and Liam were disappointed when a DNA test confirmed that Bill was Liam's dad, and at first they wanted nothing to do with one another. Thanks to Katie and Hope's efforts, the men ultimately agreed to explore a father/son relationship, and Bill offered Liam the opportunity to work his way up at Spencer Publications. Bill presented Liam with a sword necklace identical to his own.

Hope and Liam professed their love. Steffy became interested in Liam upon learning he was a Spencer, and she tried to seduce him while he was interviewing her for work, but he remained true to Hope. Liam officially changed his name to "William Spencer III," which garnered the attention of the press, and Liam was named one of L.A.'s most eligible bachelors. Bill declared Liam the "new face" of Spencer Publications, and he pressured Liam to maintain an adventurous playboy image. Oliver and Amber conspired to create a rift between Liam and Hope, and Bill supported their efforts. Their initial schemes didn't work, but Amber followed Liam home from a party, and he tripped and hit his head, suffering a concussion.

Amber removed Liam's clothes and crawled naked into bed next to him, and then she claimed they'd had sex. Hope forgave Liam's alleged indiscretion, but Amber soon purported to be pregnant with his child. Amber enlisted Carl's help in faking a paternity test, which "proved" that Liam was the father. During a confrontation with Amber at Tawny's trailer, Liam went outside to relight the pilot light, and an explosion resulted. Amber dragged Liam away from the flames and performed CPR to save his life. Hope at first stood by Liam as he faced impending fatherhood, but the couple drifted apart during Amber's pregnancy.

Bill moved Amber into the cliff house, where Liam and Amber spent time together preparing for the baby's arrival. After Hope ended her relationship with Liam, he allowed Amber to seduce him, which created even more distance between Liam and Hope. Hope eventually forgave Liam, and he was about to whisk her away to Cabo San Lucas on the Spencer jet. He received word that Amber was in labor, so he canceled the trip and rushed to the hospital, leaving Hope to doubt their future. Amber gave birth to an African-American baby, and everyone realized that Liam wasn't the father. Amber admitted that she and Liam had never had sex the night of his concussion, and he and Hope joyfully reunited. Bill kicked Amber out of the cliff house and offered it to Liam, who moved in.

Liam was stunned when he witnessed a kiss between Bill and Steffy, and Liam encouraged Bill to fight for his marriage to Katie. Bill ultimately stayed with Katie after she suffered a heart attack, and Liam stopped by Steffy's penthouse to drop off Bill's keys. He sensed something was wrong when she didn't answer the door, and he burst in and found her underwater and unconscious in the bathtub. He performed CPR to save her life, and she impulsively kissed him in return. Liam and Steffy felt a connection, and she began to plant seeds of doubt in his mind regarding Hope's level of commitment to him.

Hope's vow of abstinence until marriage perplexed Liam. As a solution, he romantically and publicly proposed during a Forrester fashion show, and Hope accepted, though her devotion to work kept them from spending time together. Steffy aggravated the situation by continuously insisting to Liam that Hope wasn't the right woman for him and that Steffy was. On the night of Liam's bachelor party, Hope planned to surprise Liam by moving in and finally making love. However, when she found Liam and Steffy kissing in his car, she abruptly ended the engagement via a phone call, and she left her ring on Liam's mantel.

A devastated Liam proposed to Steffy with Hope's ring. Steffy accepted, and Liam and Steffy had sex. Bill arranged for Steffy and Liam to travel to Aspen for a romantic getaway. Hope regretted her hasty decision and tracked them down, but Steffy learned of Hope's desire to reunite with Liam, and she hurriedly arranged a wedding at the top of Ajax for herself and Liam. Steffy conspired with Bill to stop the gondola, and Hope was forced to watch the wedding while helplessly trapped on board. Steffy initially denied that she had schemed to keep Hope away from Liam, but she eventually admitted the truth, and Liam was clearly torn between Steffy and Hope.