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In Brooklyn, New York, in 1957, Rudolf Abel retrieves a secret message from a park bench and reads it just before FBI agents burst into his rented room. He prevents discovery of the message, but other evidence in the room leads to his arrest and prosecution as a Soviet spy.

James B. Donovan, a lawyer who specializes in insurance settlements, is asked by his partners to take on Abel's defense. The United States believe that Abel is a KGB spy, but wants him to have a fair trial to reduce the Soviet Union's opportunity to use it for propaganda. Donovan meets with Abel in prison, where the Soviet agrees to accept his help. Abel refuses to cooperate with the U.S. government on any revelations of the intelligence world.

Although Donovan takes his work seriously, no one—including the prosecuting attorneys, the judge, his firm, or his family—expects him to mount a strong defense of Abel. His efforts to seek acquittal are met with shock and anger by the American public; he is deluged with hate mail and his life is threatened, but he continues to fight.

Abel is found guilty of all charges, but Donovan convinces the judge to sentence him to 30 years imprisonment, rather than death, on the grounds that Abel may one day be valuable as a bargaining chip with the USSR. Donovan subsequently appeals to the U.S. Supreme Court that the evidence presented by the prosecution is tainted by an invalid search warrant. He invokes the rhetoric of the U.S. Constitution and leaders who founded the government. They made a legal justice system possible, an objective system where cases would not be subject to whims of fear and trepidation. He reminds the court how resolute Abel is in not divulging any classified information, asking if the United States should stand as strongly and protect the legal system for what it is. He loses 5–4.

In the meantime, Francis Gary Powers goes on a U-2 spy plane sortie over the Soviet Union, where he is shot down and captured. He is convicted and subjected to interrogation. Frederic Pryor, an American economics graduate student, visits his German girlfriend in East Berlin just as the Berlin Wall is being built. He tries to bring her back into West Berlin, but is stopped by border guards and arrested as an American spy.

The USSR sends a backchannel message to Donovan, via a false letter to Abel from his "family", proposing a prisoner exchange: Abel for Powers. Donovan travels to Berlin to begin negotiations. He hears of Pryor's capture and insists on a 2-for-1 exchange instead. Although the CIA is interested only in Powers's return, it allows Donovan to negotiate for Pryor as well on the condition that the Abel-for-Powers deal is not jeopardized.

The East German government, which is holding Pryor, suddenly pulls out, insulted that Donovan did not inform them that the USSR was a party to the negotiation. The CIA wants to leave Pryor behind and finish the exchange. Donovan threatens East Germany by saying that, unless Pryor is released, the entire deal will be scrapped, Abel could talk, and the USSR would blame East Germany for any damage. Through long hours and patience, his steely resolve was rewarded. East Germany complies, and the exchange is conducted at the Glienicke Bridge and Checkpoint Charlie simultaneously, freeing the three men. Donovan gains credit for his achievement.

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