Michael Cohen turned against Donald Trump after the President backed Vladimir Putin ahead of US intelligence services.
A summit between the two leaders in Helsinki in July was the final straw for Cohen, his lawyer Lanny Davis told Sky News, prompting him to seriously question Mr Trump's loyalty to the US and suggesting "almost a mental instability in the man".
The president's former "fixer" had previously been a staunch supporter of Mr Trump, saying he would "take a bullet" for the president.
Mr Davis added that it was "absolutely clear that Donald Trump committed a felony" by ordering hush payments be made to two women "so that his political election chances would not be harmed" before the 2016 presidential election.
Cohen told a court on Tuesday that he had paid off porn actress Stormy Daniels and model Karen McDougal in order to influence the 2016 US election campaign, at the direction of a "candidate".
Mr Davis said his client "was talking about Donald Trump" and that he had "directed and co-ordinated" the payments.
When asked in April if he knew about a $130,000 payment made to Ms Daniels, Mr Trump said no.
Mr Davis told Sky News the president "lied about" committing the felony.
He said he was unsure whether Cohen's information "would be the smoking gun" leading to impeachment, but said he didn't think a crime at "this level of seriousness" had been committed by a president before.
The former lawyer's admission of hush money followed what a senior source called a "bad day" for the Trump administration.
On Tuesday, former campaign manager Paul Manafort was found guilty of eight of 18 charges relating to financial crime, bank fraud and avoiding paying taxes to the tune of more than $16m (£12.4m).
It was the first trial victory for special counsel Robert Mueller's team.
If anyone is looking for a good lawyer, I would strongly suggest that you dont retain the services of Michael Cohen!
— Donald J. Trump (@realDonaldTrump) 22 August 2018
Mr Trump said the Manafort case had nothing to do with the alleged 2016 collusion that Mr Mueller is probing and dismissed Michael Cohen's admissions.
He tweeted: "If anyone is looking for a good lawyer, I would strongly suggest that you don't retain the services of Michael Cohen!"
More from Donald Trump
The president went on: "Michael Cohen plead guilty to two counts of campaign finance violations that are not a crime. President Obama had a big campaign finance violation and it was easily settled!"
On Wednesday, the White House said Mr Trump was "not concerned at all" by Cohen co-operating with FBI investigators.
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Sky News
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