I think the term dual relationships refers to a therapist having two kinds of relationships with the same person, such as client and student, or client and co-author on a book, or client and realtor.

For a T to have relationships with two people who know each other, such as two clients who are close friends or family members, or in this case a client and a colleague who are friends, is not a dual relationship as I understand it, and is not necessarily a problem. Certainly in the US having clients who know each other very well is not unethical. Some T's avoid this because it's true, one has to be very careful about confidentiality, and yes, complicated ethical situations could arise. But a good T practicing in the same town for many years will end up with business which is mostly by referral, and will have many clients who know other clients. My T is like this, and he is very careful, and professional and consistent, and I don't think it's a problem for him. Not just having rosy-colored glasses here, I've really thought about it and I think he handles it very well.

So the bigger problem I would anticipate is not confidentiality -- because that should be strict whether we're talking about the T's other clients or the T's friends or romantic partners. Confidentiality is confidentiality, period. The bigger problem would be seeing T in social situations I think. If the relationship continues between the friend and T, it may simply be too weird to manage the social encounters. It sounds like a very unfortunate development and I agree it would have been nice if the friend had thought about this possibility before making the referral. But on the other hand, I imagine that this friend holds the T in very high regard, and meant well in making a referral (which at the time was far less complicated), and is probably worrying about how to handle this too.