Alan and Denny begin work as Coast Guard officers, which inevitably leads to busting a party boat of bikini-clad women. Denny states the women are violating national wartime security, but will let it slide if he and Alan 'supervise' the party. Denny's in the communal hot tub within minutes.
Back at Crane, Poole & Schmidt, Bethany is fighting a tobacco firm on behalf of a woman who lost her father to lung cancer. She's made little progress in seven years and enlists Alan's help. The partners give Alan the green light to pursue the case.
Alan discovers his ex, Phoebe, is now the lead counsel for that tobacco company. Because a new doctor is called to testify (the old one died while waiting for the case to go to trial), the case is postponed by a day. During the doctor's deposition, Alan and Phoebe bicker and flirt. Bethany tries to put a stop to it, but nothing works.
Alan explains his personal ties to Phoebe to Denny, and Denny drops his own bombshell: his "junk doesn't work!!" Carl joins the pair and tries to talk about the tobacco case, but Denny's issue has taken the room. Denny then asks to borrow Shirley's old cheerleading uniform to try "work out" his problem, but she refuses.
As Alan hits on Katie, Phoebe enters and remarks on his fondness for young associates. She offers him $150,000 to settle the case. Alan refuses and Phoebe claims that he's lost his passion.
Court goes on as usual until a woman's moans interrupt. It sounds like pornography. Instead, it's just Denny's latest ring tone. (It was his doctor's idea.)
Phoebe tries to blame the plaintiff's father's lung cancer on a barrage of other factors radon, asbestos, family history, etc. that are as harmful as smoking. Jerry Espenson counters with a moving speech about racism, classism and other evils that keep the tobacco industry in business. He then runs out of the courtroom.
Alan's now worried about losing the case, just as he lost Phoebe years before. He envisions himself dancing with her. As he explains his daydream to Denny, Denny finds a parallel between his genitals and Alan's confidence. He offers Alan a pep talk, which succeeds: Alan gives a great closing argument against the tobacco industry.
As the attorneys and clients wait for the verdict, the company again tries to settle, but Bethany refuses. She also refuses Denny's advances.
The plaintiff is awarded more than $2.6 million in various damages, stunning everyone. Phoebe congratulates Alan and gives him a kiss goodbye.
Later, while enjoying scotch and cigars, Alan pontificates with Denny on the irony of loving one form of tobacco (which, incidentally, is how the two met and became friends) while loathing another. They then discover Shirley's old cheerleading uniform, decide to share it, and dance with their respective pieces of the outfit long into the night.