Underwritten Weekly

On Friday night, at The King’s Head, we had a leaving do.

I will not name the leaver, partly out of discretion and partly because by 11pm I could no longer reliably name anyone, including myself.

At the start of the evening, in a moment of unearned confidence, I put my card behind the bar and said the five most dangerous words in the English language:

“Get them whatever they want.”

No limit. No terms. No schedule of approved drinks. Just an open-ended commitment, to an unknown liability, on behalf of people I could already hear attempting to order cocktails. Fortunately for me Alex, the landlord, once told someone who ordered a vodka, lemonade and lime “we don’t do cocktails”.

The thing is though; it works. We had a great night and nobody spent the evening doing mental arithmetic. Nobody hovered by the bar negotiating. The whole night ran on the simple arrangement: there’s a card behind the bar, we’ll figure it out later.

I settled up at the end, and I’m not going to tell you the figure, lest a particular reader reads my “let’s go on holiday when I’m less skint” excuse as somewhat hollow.

Which brings me, with the subtlety of a man holding a receipt as long as his arm, to a storm at sea, and a market concept I first learnt about thirteen years ago, when I worked for the Corporation itself, on the system that manages the whole thing.

Onboard a cargo ship, somewhere unpleasant, in weather that has stopped being weather and started being a verdict. The engine is dead. The ship is drifting towards rocks. There is a crew on board and several thousand tonnes of fuel, and the number of hours in which this ends well is already small and shrinking rapidly.

In a port nearby: a salvage tug. Powerful, crewed, ready. The one thing on Earth that can fix this mess.

In any normal commercial world, what happens next is a negotiation. Salvage is not only expensive, it’s also monstrously dangerous, and the tug’s owners would quite reasonably like to know they’re going to get paid their fee before they change out of their pyjamas and go steaming into a force ten to earn it. So we need to instruct some lawyers. We need to consult with the owners. We need to book meeting rooms and Teams calls so that offers can go back and forth across time zones, and everyone can agree who’s meeting it actually is.

Sadly, while all this is going on, the ship keeps drifting. The rocks aren’t in the mood to pause for commercial discussions, and the sea has always operated with something of a disdain for terms and conditions.

So the market wrote a contract, a contract with a deliberate hole in it.

The Lloyd’s Open Form. A salvage agreement in which the most important number – the price – is deliberately left out. It can be agreed over the ship to shore in minutes, mid-storm, often in a single exchange. What it says, stripped of the legal bit, is this:

Go. Now. Save the crew. Save the ship. Save the cargo. In that order. We’ll work out what everything’s worth later, in London, in the dry, when everyone is alive to disagree in comfort.

The legal jargon that gives the Open Form teeth: “no cure, no pay.”.  Save nothing? Earn nothing. Succeed, and an arbitrator decides what a rescue in a force ten is honestly worth – which is generally quite a lot, because arbitrators, unlike storms, are trained to be reasonable.

Think about how strange this is. Every instrument of business is always: agree the price first. Every contract you have ever signed has had a number on it. And here is a document, born nearly 150 years ago, and still in use this morning, whose entire genius is refusing to have one – because somebody understood that in the situations where minutes are lives, the price is the only thing that can wait.

The tug captain doesn’t read it. The exhausted crew being winched off the deck have probably never heard of it. It works on them anyway, silently, the way a keel works even if you never look below the waterline.

I put my card behind the bar on Friday and discovered, in the smallest and least heroic way possible, why the arrangement works. Remove the negotiation, and people stop calculating and start acting. The evening flowed. The tug launches. The blank in the form isn’t a missing detail. It’s the engine.

That’s the standard, I think, for anything we build: does it move the moment of action earlier? Does it take a conversation that used to block the “let’s go and do this” and shift it to afterwards, where it can’t hurt anyone? A form with a blank in it has been passing that test for 130 years. Because sometimes, uncertainty is less dangerous than delay.

Have a good week.

Rob

P.S. The arbitration on Friday’s bar tab was conducted the following morning between me and my banking app. The app found against me in full.

P.P.S. Hat tip to The Lloyd’s Agency Network and Salvage Arbitration Branch. Told you we’d eventually get the app live, but not for the first time, it was a tough one. And yes, I do remember SCOPIC exists, schush.