Miami liquor wholesaler Michael Gallagher (Paul Newman), who is the son of a deceased criminal, awakes one day to find himself a front-page story in the local newspaper, indicating that he is being investigated in the disappearance and presumed murder of a local longshoremen’s union official, Joey Diaz.
The story was written by Miami Standard newspaper reporter Megan Carter (Sally Field), who reads it from a file, left intentionally on the desktop of federal prosecutor Elliot Rosen (Bob Balaban). As it turns out, Rosen is doing a bogus investigation and has leaked it with the purpose of squeezing Gallagher for information.
Gallagher comes to the newspaper’s office trying to discover the basis for the story, but Carter does not reveal her source.
Gallagher’s business is shut down by union officials who are now suspicious of him since he has been implicated in Diaz’s murder. Local crime boss Malderone, Gallagher’s uncle, has him followed, just in case he talks to the government.
Teresa Perrone (Melinda Dillon), a lifelong friend of Gallagher, tells the reporter that Gallagher could not have killed Diaz because Gallagher took her out of town to get an abortion that weekend. A devout Catholic, she does not want Carter to reveal the abortion, but Carter includes it in the story anyway. When the paper comes out the next morning, Perrone picks up the copies from her neighbors’ yards before they can be read. Later, offscreen, she commits suicide.
The paper’s editor McAdam tells Carter that Perrone has committed suicide. Carter goes to Gallagher to apologize, but an enraged Gallagher assaults her. Nevertheless, she attempts to make it up to him by revealing Rosen’s role in the investigation.
Gallagher hatches a plan for revenge. He arranges a secret meeting with District Attorney Quinn (Don Hood), offering to use his organized-crime contacts to give Quinn exclusive information on Diaz’s murder, in exchange for the D.A. calling off the investigation and issuing a public statement clearing him. Both before his meeting with Quinn and after Quinn’s public statement, Gallagher makes significant anonymous contributions to one of Quinn’s political action committee backers. Gallagher, thankful for Carter’s help, also begins a love affair with her.
Rosen is mystified by Quinn’s exoneration of Gallagher, so he places phone taps on both and begins a surveillance of their movements. He and federal agent Bob Waddell obtain evidence of Gallagher’s donations to Quinn’s political committee. They also find out about Gallagher and Carter’s relationship.
Waddell, as a friend, warns Carter about the investigation to keep her out of trouble, but she breaks the story that the office of the district attorney (D.A.) is investigating Gallagher’s attempt to bribe the D.A.
The story makes the front page again and causes a huge uproar over the government investigating the District Attorney. The US Assistant Attorney General Wells (Wilford Brimley) ultimately calls all of the principals together. He offers them a choice between going before a grand jury and informally making their case to him. Rosen questions Gallagher but it quickly becomes apparent that he has no case, and Carter reveals that Rosen left the file on Gallagher open on his desk for her to read.
After the truth comes out, Wells suggests Quinn resign. (Gallagher’s donations to Quinn’s political committee, though not illegal, cast suspicions on Quinn’s motives in issuing his statement clearing Gallagher.) Wells also suspects that Gallagher set everything up, but cannot prove it, so he will not investigate further. Finally, Wells fires Rosen for malfeasance. The newspaper now prints a new story written by a different reporter revealing details of the incidents.
It is unclear whether Carter keeps her job, or whether Carter’s relationship with Gallagher will continue, but the final scene shows them having a cordial conversation on the wharf where Gallagher’s boat is docked before he sails away and leaves the city.