Michael Clayton is a “fixer” for a prestigious New York City law firm, using his connections and knowledge of legal loopholes for clients’ benefit. One night he receives a call about a client who was involved in a hit-and-run accident, leaving his high-stakes poker game to attend to the matter. Later he drives into the countryside and in the early morning he suddenly stops to approach a trio of horses in a field, when a bomb detonates in his car parked nearby.
The above is the first 16 minutes of the film. The next 80 minutes is one long flashback.
Four days earlier, Arthur Edens, one of the firm’s leading attorneys, has a manic episode in the middle of a deposition in Milwaukee involving a multibillion-dollar, six-year-long class action lawsuit against client U-North, an agricultural products conglomerate. Michael arrives in Milwaukee and bails Arthur out of jail after finding out he is no longer taking his medication, but Arthur escapes from their hotel room in the middle of the night and returns to New York. The viewer learns that Michael is $75,000 in debt from a restaurant investment he entered with his brother Timmy, which collapsed when Timmy used the restaurant’s funds to fuel his drug habits. Michael, having gone to a loan shark to raise the money, is held responsible for the debt and given one week to come up with the money. Michael asks his boss Marty Bach for a loan to cover the expenses; Marty insinuates that if Michael is successful in containing Arthur then he can secure the loan.
Karen Crowder, U-North’s general counsel, discovers that Arthur had come into possession of a confidential U-North document, a 1991 memo detailing the company’s decision to manufacture a weed killer it knew to be carcinogenic, a decision which led to 468 deaths and the class-action lawsuit. Karen brings this to the attention of U-North’s CEO Don Jeffries, whose signature is on the 1991 memo. Don puts her in contact with two hitmen secretly on retainer. She contracts them to follow Arthur and bug his apartment and phone. Michael finds Arthur on a Manhattan street and confronts him about calls he made to Anna Kaiserson, one of the plaintiffs in the U-North suit. Knowing that his contacts with Anna were secret, Arthur realizes that his calls are being monitored. That night, Arthur calls his own voicemail at the firm and, knowing that his phone is bugged, brazenly reads from the 1991 memo, mockingly informing them that he will go public with the memo and ruin U-North. When the hitmen tell Karen that Arthur is building a case to expose U-North, she approves of their taking “drastic measures.” Donning medical gloves so as to not leave behind forensic evidence, the men break into Arthur’s apartment and electrocute him with a cattle prod before injecting him with a fatal overdose of an unknown drug, leaving his body in a way to make the murder appear as a suicide.
At first devastated on learning of Arthur’s death, Michael becomes suspicious when he discovers that U-North was planning a settlement just a few days before, and that Arthur had booked a flight to New York for Anna. He finds Anna and learns that no one knew of her conversations with Arthur, not even her attorney, yet Michael’s firm somehow knew of Arthur’s conversations with the U-North plaintiffs. With the help of Michael’s other brother Gene, a police detective, Michael gets access to Arthur’s sealed apartment and, finding a bottle of champagne and two glasses in the refrigerator, suspects Arthur arranged to meet Anna. There is also a copy of Realm and Conquest, a fantasy novel which Michael’s son Henry had recommended to both Michael and Arthur, with several pages evidently highlighted and annotated by Arthur, among which is a receipt from a photocopy shop being used as a bookmark.
The two hitmen, who have been trailing Michael, call the police when they see him enter the apartment. Michael is caught and arrested for trespassing, but Gene bails him out. Using the photocopy receipt, Michael discovers that Arthur had ordered 3,000 copies of the confidential U-North document. Michael takes one copy of the document with him. The hitmen also obtain a copy, which they provide to Karen. Michael is about to show Marty the document in his possession, but before he can do so, he is offered a renewed employment contract as well as the $80,000 he had requested to cover his debt. As a condition, Marty’s associate, Barry Grissom, operating on the assumption that Michael may be shaking down the firm based upon what he has found out about U-North’s activities, imposes a confidentiality agreement on Michael to prevent him from divulging any information that might damage U-North’s case. This reveals to Michael that Marty and Barry already know about U-North’s cover-up.
At this point the long flashback merges with the timeline of the beginning of the film.
One of the hit men rigs Michael’s car with a bomb, but is forced to leave the job unfinished when Michael suddenly abandons his poker game after receiving a phone call summoning him to meet the hit-and-run client. He is followed by the hit men, who have trouble tracking him, but eventually get close enough to detonate the radio-controlled bomb. When the bomb explodes, Michael runs back to his burning car, throws some of his personal effects into it, and escapes into the woods. Everyone at the firm presumes that Michael died in the explosion.
Later, at a U-North board meeting at the New York Hilton Midtown hotel, Karen proposes that the board approve a new settlement in the class action lawsuit against the company. She leaves the room to let the board of directors deliberate. She is shocked when Michael confronts her in the foyer, since she believed him to be dead. He informs her that he has possession of the U-North memo, and knows about her role in Arthur’s murder and the subsequent attempt on his own life. He goads Karen into offering him $10 million for his silence. Karen reluctantly agrees, whereupon Michael reveals that he is wearing a wire, with NYPD detectives listening on the other end. With her life and career destroyed, a distraught Karen sinks to her knees as the police arrive to arrest her and Don. Michael leaves the building; getting into a cab he tells the driver “Give me $50 worth. Just drive”.