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What to do, Dog shuts down in fear w/owner?

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Anyone have suggestions?  I am working with an owner, ex state trooper with K-9 unit, and his 4 month old G. shep.  He began working with her using the old force method and quickly found it wouldn't work with the "soft" dog.  I started working with the dog, initially without the owner and she works great for me and learns quickly.  But with the owner, who stopped asking her to do anything for him for a while to try and repair their relationship, she will work for him for 2-5 commands and then shuts down.  She suddenly looks afraid and walks off to lay down.  If he sits down, the dog will come up under his leg and enjoy being pet.  Not sure what to tell him to do when she shuts down on him.  Any suggestions?

Lisa