B u m p e r X m a s E d i The Devil’s Advocate tio n The odd newsletter from the Jolly Contrarian Edition 1: December 2020

Here’s looking at you, old normal The Devil’s Advocate 2 December 2020

The End of Insurance? Will the rise of the networked economy and the emerging power of big data supercharge the business of insurance, or kill it? Through the prism of new-age insurer Root, Marc Rubinstein investigates.

Daniel Bernoulli wasn’t even the wealthy than this would be fool- surance goes like this: best mathematician in his own ish to provide the surety, but it “For centuries, traditional insur- family. But his contribution to makes sense for a wealthier man ance companies have grouped reckons that only now, through the study of risk is profound. to do so.” people into risk pools and long mobile phone deployment, has it In his essay of 1738, Exposition It wasn’t a particularly useful relied on the ‘law of large num- become scalable. Its predictive of a New Theory on the Measure- theory and in 1979 it was fa- bers’ to produce acceptable pric- analytics are a work-in-progress, ment of Risk, Bernoulli applies mously revised by Daniel Kahne- ing on an aggregate basis. Fair- but it reckons that the worst his mind to the question of insur- man and Amos Tversky.1 But it ness at the individual level has 10-15% drivers it screens are two ance. The basics of probability captures why insurance compa- been largely ignored. Root is dif- times more likely to get in an ac- theory had already been un- nies are big. ferent—we use technology to cident than its average targeted customer. earthed, but Bernoulli was puz- Insurance is predicated on two measure risk based on individual zled by how insurance fit into its principles: performance, prioritizing fair- Various third party vendors sell framework. ness to the customer.” similar data: Law of large numbers. If you re- His thinking goes like this: to be peat a random experiment often The company relies on data to Octo Telematics claims it has 248 viable, an insurer would need to enough, the average of the out- predict the probability of a cus- billion miles of driving data col- charge a premium at least equal comes will converge towards the tomer suffering a loss. It gathers lected and over 464,000 insur- to the expected value of any expected value. A larger book of this data from customers’ mobile ance events analysed; claims that may be made against business therefore confers phones, picking up braking and Cambridge Mobile Analytics it; to lock in a profit margin, the greater loss clarity to an insurer turning speeds, miles driven, partners with State Farm, Liberty insurer would have to charge than a smaller book. The greater phone usage while driving and Mutual, Nationwide and other more. Yet why would a buyer the number of similar risks the more. Its app picks up over 200 leading insurers and has Soft- want to pay more than the ex- insurer can bring together, the factors in total, which add to oth- bank backing; pected value of their losses? An er, traditional factors like age, higher their confidence at pre- Greater Than is a listed Swedish insurance contract is zero-sum— gender and ZIP code. dicting overall claims. technology company which has one party’s loss is the other par- Risk pooling. For typical insur- In the traditional model, risk analysed 750 million driving pro- ty’s gain. Which means that in a able risks, the frequency of pools would be formed along a files. It claims its AI “predicts ac- world of economically rational claims is low and an insurer can set of rate factors, with each pool cidents before they happen”. people, there isn’t a price at corresponding to a certain com- spread losses suffered by a few Taken to its extreme, individual which insurance makes sense. bination of rate factor categories policyholders across a large risk profiling undermines the Clearly, empirical evidence is (or intervals where the factors group of similar policies. A hun- very need for insurance. If acci- such that insurance does make are continuous). Within each dred people of similar risk profile dents can be predicted before sense. Today, buyers spend $6.3 pool, actuaries analyse historic each paying a premium of $200 a they happen, they become unin- trillion a year on insurance pre- claims data to arrive at an esti- year can cover the risk of any one surable—like an insurance un- miums. mate of the minimum payment of them losing $20,000. derwriter’s Minority Report. per policy required to cover ex- Bernoulli proposed a fix that be- These twin concepts give an in- More realistically, predictive ana- pected losses. In order to over- came a cornerstone of economic surance company the grounding lytics could lead to materially come adverse selection – where thinking for the next two and half to offer policyholders risk trans- higher rates for riskier con- policyholders take advantage of centuries. He suggested that fer at an acceptable premium. sumers, making insurance unaf- an insurance company that has rather than consider profit and They allow the transformation of fordable for them. Insurance was failed to price risk correctly – a loss in absolute terms, the parties unknown individual uncertainty built upon the recognition of the bonus system is incorporated to consider the utility of their profit about the future into a measur- irreducible opacity of individu- reduce the premium for policy- and loss. Because their utility able aggregate risk. als; behavioural data offers to lift functions don’t have to be the holders with a good claims histo- Except now we have data. Lots that opacity. same, a price emerges at which ry. and lots of data. Data can be cap- For various reasons, we’re not yet both parties are comfortable en- Root characterises this process as tured on a much more granular at that extreme. Most insurance tering an insurance contract. one of correlation and not and personalised level of detail. companies use behavioural data Bernoulli suggested that such causality, and it “strive[s] to This means that rather than rely as a complement to their tradi- utility was a function of how price based more on causality on a collective approach to risk, tional methods of pricing, re- much wealth each of the parties than correlation”. So it mines insurers can underwrite to spe- warding customers with a dis- had in reserve. The greater the driving performance data for sig- cific individualised risk. count on the traditional tariff. wealth of the insurance buyer, nals of cause. It claims to have Even Root, despite its disruptive the lower their propensity to buy Enter Root data from over 10 billion miles of credentials, isn’t there yet: insurance. Meanwhile, the Next week Root goes public. It’s driving and hundreds of thou- greater the wealth of the insurer, an insurance company focussed sands of claims. Although telem- “Over time we hope that we can the greater their propensity to on the US auto market. Their atics technology has been around replace all correlation-related in- sell insurance: “A man less view on the twin principles of in- for many years, the company puts to our pricing model, such The Devil’s Advocate December 2020 3 as credit scores, with a fully be- Second is that there are some havioral pricing model.” regulatory implications. Policy- This edition’s contributors makers are concerned about data The company recently an- Graeme Johnston nounced an initiative to remove privacy (a risk factor cited by credit scoring from its underwrit- Root) and also about discrimina- Graeme is the CEO of Juralio, a software ing criteria by 2025. In the tion. Discrimination applies un- company based in Scotland. He’s also meantime, its pricing still relies der current standards, too—Eu- coordinating the open source legal project noslegal.org. Get in heavily on it, together with other ropean legislation prohibits the touch with Graeme at [email protected] use of a gender rating; but if al- traditional factors like age, gen- Electra Japonas der and ZIP code. An analysis of gorithms reverse engineer gen- Root’s regulatory rate filings der, that could be seen as prob- Electra is the CEO and shows that its premium has his- lematic. founder of The Law Boutique, torically tracked Progressive’s. Finally, driver behaviour may not a legal company that takes a holistic approach to legal support, Its premium per policy isn’t that be as consistent as fixed variables beyond just the law. Get in touch with Electra at different either, so it doesn’t look like age and address. Root under- [email protected] like it’s picking up analytically writes policyholders after observ- lower risk customers by offering ing their driving patterns for two Andrew Pegler them a fairer price. to four weeks on a test drive. Yet Andrew is the Founder and CEO of Andrew Nor are the benefits of predictive six months later, it doesn’t offer Pegler Media, is an award winning plain analytics visible in its loss trends. renewal policies to a third of pol- English training, editing and writing agency The company reports losses of icyholders, indicating a change in in Melbourne. Get in touch with Andrew at around 100 cents on every dollar behaviour between the first two www.andrewpeglermedia.com.au of premium earned. That com- to four weeks and the next six Marc Rubinstein pares with peers who lose around months. Those customers who do 70 cents per dollar. Root claims pass the underwriting test may Marc started looking at banks 25 years ago Net Interest that long-standing customers be put off if their rate increases and hasn’t stopped. He’s seen it all, sell- have better loss ratios. But right without the incidence of a claim. side and buy-side, and now comments from the the tell-it-like- now it is struggling to retain cus- There are many advantages to it-is-side through of his “Net Interest” blog. You can, and tomers. Its one-year retention personalised pricing. It’s fairer, should, sign up here: www.netinterest.substack.com rate is around 38% which com- as Root highlights. In addition, Marc Weisberger pares with 60-85% among peers. instant feedback on risk scoring Marc is a partner at Gunner Cooke LLP with over There’s an irony that a company can influence behaviour positive- 20 years of experience in commodities trading, presenting itself as a technology ly, reducing the scope for acci- finance and investment. His track record covers company – where value typically dents. The transaction becomes transactions and dispute resolution in the energy, metals and accrues to high retention and one of prevention rather than in- softs markets. Get in touch with Marc at correspondingly high customer surance. [email protected] lifetime value – has retention However, there’s also a darker rates (and by implication cus- side. In her book, Weapons of Richard Robinson tomer lifetime values) lower than Math Destruction, author Cathy Richard is CEO and Founder of venture-backed legal the incumbent industry from O’Neil cautions how big data can technology start-up, Robin AI. Get in touch with which it wants to distance itself.2 increase inequality across soci- Richard at [email protected] There are a number of reasons eties. On personalised pricing in why, despite the best intentions insurance, she says: Lindsay Healy of Root, we may be years away ...surveillance will change the Lindsay is the founder of Aria Grace Law: from insurance existentially dis- very nature of insurance. Insur- One ecosystem for clients, lawyers and society, now and for the rupting itself. ance is an industry, traditionally, future. Get in touch with Lindsay at [email protected] The first is the same constraint that draws on the majority of the that many technologies find community to respond to the themselves under—battery life. needs of an unfortunate minori- ther drive their rates to the of insurance, and the hits will fall As mobile phones suck be- ty. In the villages we lived in cen- stratosphere or, where legal, de- especially hard on those who can havioural data out of their users turies ago, families, religious ny them coverage. This is a far least afford them. and upload it to Root HQ, their groups, and neighbours helped cry from insurance’s original Lemonade, in its listing prospec- batteries drain. This limits the look after each other when fire, purpose, which is to help society tus, provides a potted overview of volume of data that can be pulled accident, or illness struck. In the balance its risk. In a targeted the history of insurance. They without compromising customer market economy, we outsource world, we no longer pay the aver- talk about the emergence of in- satisfaction. Increasingly, con- this care to insurance compa- age. Instead, we’re saddled with surance dynasties that have nected vehicles are hitting the nies… anticipated costs. Instead of reigned since the time of roads with a built-in capacity to As insurance companies learn smoothing life’s bumps, insur- Bernoulli. They conclude: “A new upload data directly, yet they lack more about us, they’ll be able to ance companies will demand revolution now threatens these the ability to assess phone usage pinpoint those who appear the payment for those bumps in ad- hegemons.” vance. This undermines the point while driving. riskiest customers and then ei- Beware the revolution.

1 Ole Peters and Alexander Adamou the contract think about time average in some ways is the precursor to customer the later years of a contract. Insurance present an alternative theory derived by growth rates of their wealth. This leads to lifetime analytics popular more broadly startups like Bought by Many and Next addressing the concept of ergodicity. They a different calculus, in which the contract today. The key input to embedded value is Insurance target LTV/CAC ratios of 3.0x argue that time needs to be incorporated is not zero sum. the present value of in-force business. The which is a new way of reflecting an old into the model. Rather than thinking in 2 Embedded value accounting emerged in analysis recognises that in a typical insurance idea. terms of expected values, which reflect an the insurance industry in the 1990’s and cashflow profile, losses are incurred in the average over parallel universes, parties to first year which are recovered by profits in The Devil’s Advocate 4 December 2020 The trouble with lawyers

Plain English is all very well, but its not as official is it? When the going gets tough, the tough get syllables, right? Not so, says Electra Japonas.

See, lawyers are special. A real-life example ing or advising. The language they use is very In 2010, US lawyer Sean Flam- Here’s an example of how you special. And by special, we mean mer asked 800 circuit court might structure advice. Firstly, painful. We have been (expen- judges to choose which argument start by defining the questions sively) trained for years to speak was best framed. One was a tra- your client really wants to know. in ‘code’, or ‘legalese’ as it’s often ditional ‘legalese’ argument, the The structure might be: can end her employment under called. other was in what he called ‘plain Can I do what I want to do? Clause 3 which says that we can ‘Legalese’ is reserved for lawyers English’. Will I get in trouble because of do that if the employee acts in a and the complicated, technical The judges overwhelmingly pre- it? way that is not in line with the in- nature of it means that those out- ferred the plain English version How much will it cost? terests of our business. We think side of the profession are left (66% to 34%), and that prefer- that Susan’s conduct is a valid confused by the jargon. ence held no matter their age or How did you reach this conclu- sion? reason for dismissal. And considering that the stuff background. The respondents al- The legal position. Under the written in legal documents is so said that they thought the If you were to read it out loud, Employment Rights Act 1996, an mostly meant for other people, plain English author was more does it sound like the kind of employer may end an employee’s and rarely the lawyers them- believable, better educated and thing you’d actually say? employment for misconduct. selves, this seems counter-pro- worked for a prestigious law Case study This may be a single serious act ductive. firm. Say for example John from HR or a series of less serious acts. I In conclusion, plain English But legal language doesn’t need asks you whether he can dismiss think we can rely on the latter makes you more popular, more to be complicated. It can be seri- Susan, who has been employed here. ous and should be legally bind- believable and also makes you for four months and has been a Under English law, an employee ing, but it must also be simple. A sound clever too. less-than-model employee for can’t bring a claim for unfair dis- court won’t look at a contract A user-focused approach that time. missal against their employer un- that has the word ‘notwithstand- There’s no point in writing a con- (By the way, this is not legal ad- less they’ve been employed for ing’ in it and interpret it more tract or drafting legal advice vice: it is an illustration how you over two years OR if the employ- favourably than if it said ‘in spite which can’t be understood by might go about advising your in- er has acted in a way that quali- of’. your clients. Put yourself in your ternal stakeholders). fies the dismissal as automatical- reader’s shoes when you’re writ- Here’s what you need to know ly ‘unfair’. Can we dismiss Susan? Yes, we We don’t think that Susan can can. claim that we’re dismissing her Peotry corner What’s the risk of Susan suing for any reason that is unfair so if us? Susan may well decide to Susan decides to sue us, it’s un- bring a claim against us. But I likely that she’ll be successful. Middle Management Blues (That doesn’t mean she won’t, it WIth apologies to W.H. Auden think the chances of her winning any such claim are low. just means that she probably won’t win.) Stop all the key performance Do we need to pay them a settle- Obiter dictum indicators, cut off the Skype® ment? We don’t need to do this Stall internal audit with a load of old under the agreement or by law. Joking. We mean ‘Conclusion’. tripe, However, there are some benefits Final words of wisdom: if you al- Silence the subject matter experts, if we choose to do this. ways put your user first, tell them and with animated deck How we got there what they need to know and de- “Peotry is soppy stuff that Bring out the target operating model, liver your advice in the most di- rhymes, as any fule kno.” - n. The contractual position. Under That stakeholders will wreck. molesworth our agreement with Susan, we gestible format possible, you re- ally can’t go wrong! Let escalations circle, rise and then dip Scribble on the sky “can you run it by Chip?” Put service level agreements round the service line’s necks, Let the chief operating officer wear flannelene kecks. Foolin’ around with

You are my steerco and opco, my SOX audit pass, Latin My CBT, my CPD (where I’m best in the class) An occasional series. No. 1: The My deep dive, disclaimer, my eye-ess-dee-aye; They said the call would take minutes: It lasted all day. Buttocratic Oath The Buttocrartic Oath is ancient creed by which all those charged Please be advised that they’ve outsourced the fun, with the sacred responsibility of middle management live: Right-sized the moon — Disintermediated the sun. Primum nil errare: They’ve circled their wagons and reached around the group; “First, do no harm ... to your own career”. For our direction of travel is a Mobius loop. The Devil’s Advocate December 2020 5 Fun ’n’ games

Crack Drafting Squad™ charm-school Fixing crappy drafting is a drag, so we’re gamifying it! Each issue we invite readers to “unleash the Ellroy” and fix some famously crappy drafting. The winning entry, judged by plain English guru Andrew Pegler, will get a special JC Crack drafting Squad™ celery-chomping award: perfect for humbly boasting about on your Linkedin profile. Entries to [email protected]

It is and has been found by experience, that the office of a king in this nation and Ireland, and to have the power thereof in any single person, is unnecessary, burdensome, and dangerous to the liberty, safety, and public interest of the people, and that for the most part use has been made of the legal power and prerogative to oppress and impoverish and enslave the subject; and that usually and naturally any one person in such power makes it his interest to encroach upon the just freedom and liberty of the people, and to promote the setting up of their own will and power above the laws, so that they might enslave these Kingdoms to their own lust, be it therefore an Act ordained by the present parliament, that the office of a king in this nation shall not be henceforth reside in or be exercised by any single person. Crossword

Across Down 1. A fraction one finds at a 2. A mountain and a bath-salt make convention? (3-5) for a curious tendency to long- 5. Detective sergeant and constable windedness? (4, 7) find financial WMD (3) 3. Bite or crazy passing observations? 8. A dissenting group? One on after a (6) matter unsuitable for a legal opinion 4. We can’t agree on what a dodgy (7) accent can open (3-10) 9. Fries for the LA highway patrol? 6. Hear tell of synthetic equity swap (5) at first (3) 11. Mimic a bonobo (3) 7. Musical motif wears thin, we hear 12. Mindlessly regurgitated back (6) around opera without the French 10. Naughty curate’s porn found in takes you to the next level? (9) Taleb’s bed? (11) 13. Graeber’s sort of job reverses 14. Extremely posh orbit Orion to regulation score for captain (4) find light particle ( 6) 15. They say you pull oars settled by 16. Stasi move reveals Cold War robot target (4) visionary (6) 17. Speaks in favour of legal eagles (9) 19. EU alternative sends up Futures 18. Hypothecate for the first time? (3) Industry Association (3) 19. Self-evident truth LPO rebranded? (6) 20. Custodian offers no MDMA without possessive pronoun (6) 21. Backward European hedge fund? All over futures and options! (3) 22. South-eastern Winnebago that is good news? Or under my thumb? (8) Free bag of sweeties to the first correct entry mailed to [email protected]. Answers next edition. If there is one. The Devil’s Advocate 6 December 2020

Usable legal artifacts: a thought experiment Our words are sacred. This is hammered into us from our first law lecture: text as the irreducible legal unit. But is it? Should it be? In our networked times, don’t we need something more interoperable than that? For humans and machines? Juralio’s Graeme Johnston says “yes”.

Imagine a Voight-Kampff test to about another possible way to gal text usually don’t have distinguish lawyers-who-draft- address it, accepting that there is the time, mandate or moti- for-a-living from everyone else. no single, simple solution. vation to make it better. You and cross-references. There are The relative weight placed on Causes have to go along with things that many commercial libraries of es- precision over succinctness you know are dysfunctional. tablished text, and we are now There are at least ten causes of would likely be part of it. We’ve all been there: don’t hate seeing early versions of software complication in legal artifacts: The problem is implicit in Lord the player. that suggests clauses to use in First, we may just need detail to Bingham’s first principle of the Ninthly, it’s already hard enough context. Technology can help predictably deal with a nuanced rule of law: the law should be to train lawyers on the use of manage complication for sophis- issue in various foreseeable sce- “accessible and so far as possible plain, clear language. Training on ticated customers by applying narios. intelligible, clear and pre- simplification is another level of rules in a consistent, auditable dictable.” Secondly, the scope of law’s em- hard, given all the complicating way: e.g. smart contracts or the pire seems ever increasing: what legislative equivalent. There is But sometimes clarity requires forces. is regulated, how intensely, and now also a plethora of tools for detail. And what does “accessibil- Tenthly, legal work cultures are how harsh are the consequences identifying and extracting some ity” mean? Accessible to anyone, highly fragmented between of breach. This prompts further structured information from un- or just to anyone with enough places, sectors, organisations and complication in the private legal structured text. reading comprehension, focus other contexts. The pressure of artifacts that help businesses and time? having to communicate really But still the problem grows. cope with all that law. Without wishing to suggest that Two centuries ago, Jeremy Ben- well outside one’s fragment is of- Thirdly, we tend to confuse com- there is a single solution, the rest tham was ambitious for more: ten just not there. plexity with complication: to as- of this article explores whether It’s a tough problem. To promulgate a law, is to sume that the latter can help there might be something else present it to the minds of those with the former when relation- Addressing the problem that could help. who are to be governed by it in ships and collaboration might be There are many valid, estab- Thought experiment such manner as that they may more fruitful. lished ways to cope with legal have it habitually in their memo- The following thought experi- Fourthly, where drafters expect complication, but each has limi- ries, and may possess every fa- ment doesn’t rely on experimen- their wording to be attacked by tations. cility for consulting it, if they tal tech, but on ideas which are people looking for holes, they The most important ways are have any doubts respecting mainstream in the tech industry “penetration test” the wording low-tech: industry-standard what it prescribes. but not in law: different perspec- and fill those holes. terms and shorthands for spe- tives; modularity and progressive You don’t have to have read Fifthly, legal texts are typically cialised transactions (e.g. IN- disclosure; and community cul- David Graeber to feel afflicted by negotiated by people with differ- COTERMS, LMA); bespoke plain ture. overwhelming legal complica- ing commercial, political or or- English summaries of complicat- tion: even lawyers struggle with Different perspectives ganisational interests; and with ed legal regimes or documents; it, outside their niche. The OECD Legal drafting skill is like the ex- varied attitudes to complication. bespoke attention to the wording has written about it. So has the pertise of a software engineer. If a counterparty suggests a com- and design of legal documents so UK Parliamentary Counsel’s Of- “Being clear and precise”, in the plication, it is often smart to users can quickly grasp the fice, noting in 2013 that: way lawyers mean it, isn’t the agree to it if you can live with it, points they care about; just same as “communicating effec- … while there are many reasons perhaps introducing a further shortening artifacts and accept- tively with normals”. I’m not be- for adding complexity, there is complication to smooth off any ing some imprecision risk; or in ing pejorative here: lawyers who no compelling incentive to create sharp edges. As loud tends to certain narrow contexts, impos- talk about better drafting sound simplicity or to avoid making an drive out quiet, and bad money ing word limits. Having judges to me like software engineers dis- intricate web of laws even more drives out good, complicated who are prepared to throw the cussing “clean code”. It’s a won- complex. drafting seems to drive out sim- book at the verbose is somewhat derful idea, but not enough to But still the problem grows. Even ple. useful; hands-on regulation (trust the regulator, not the con- communicate outside the priest- in B2B, it afflicts regulations, Sixthly, some people use compli- tract) may also help; legislating hood. Making their things under- contracts, compliance manuals, cation deliberately, as a tool. standable to the wider world is process guides, corporate consti- for conciseness in the abstract Seventhly, the individual drafter not something that engineers, or tutions and more. (e.g. GDPR article 12(1)) perhaps may feel defended by complica- less so. lawyers, can effectively manage This article first discusses the tion. To put it in jobsworth alone. Technology has some value. Soft- causes of the problem and cur- terms, nobody gets fired for over- ware can now nudge us towards Software firms have long ad- rent approaches to it. It con- complicating. dressed this by involving design- cludes with a thought experiment better drafting habits, or debug Eighthly, those who work with le- legal text by checking definitions ers, with a different set of skills, The Devil’s Advocate December 2020 7 to help engineers make things This approach involves ideas each. I’m just illustrating the supplier group, it won’t be uni- that speak to the outside world similar to those reflected in IN- principle of progressive disclo- versally accepted. It needs to be while retaining precision under COTERMS for a century. Suc- sure. looked at and negotiated from a the bonnet. cinct trade usages in contexts Statute number of perspectives if it’s to such as insurance also have some be widely credible. So there’s a clue: I don’t think A similar concept could be ap- similarities. But the suggestion is lawyers can be left to solve the plied to a statutory provision. Another issue is affordability: if a to generalise those basic ideas problem alone. They need help. Take this example, based on UK significant outlay is required, and make them widely usable by Modularity and progressive public order legislation. The ul- that will limit use. creating components containing disclosure tra-compact version of an offence Community culture multiple levels of detail, for all might be along these lines: Modularity and progressive dis- sorts of legal uses, in regulations, That brings us to the idea of closure can best be illustrated procedural codes, contracts and Affray: use or threat of unlawful “community culture”. with examples: beyond. That’s modularity. violence The competitive instinct is so in- Single attribute Multiple attributes Further dimensions could be grained that the idea of lawyers shown on demand, such as: collaborating for their common Consider a contractual term with For a more sophisticated exam- benefit may be a hard sell. But a single attribute. Ideally, the ple, let’s try a contractual term Required effect: a person of rea- models have evolved in the tech reader would see something like with multiple attributes. sonable firmness hypothetically this: present at the scene would fear world for this sort of project, in- Here’s what the reader would for their personal safety cluding open source aspects Governing law: France see: Required state of mind: the ac- where people can build and share Not a sentence or paragraph, and Confidentiality: together, develop expertise and not an abbreviation (“GL: FRA”). cused either Each party agrees to keep the also share objective feedback Just a really succinct, human- (1) intended to use or threaten vi- other party’s information confi- without offence being taken. readable statement. The aim is to olence or dential. Wikipedia is probably the most (2) was aware that their conduct convey the practical meaning, famous, but within the software Exceptions: may be violent or threaten vio- but no more. world there are many examples (1) existence of this agreement lence This could be turned into a com- (Linux, Python, HTML and (2) disclosures agreed in writing ponent to allow you to substitute Maximum sentence: one or both countless others), platforms such any other legal system. It could (3) audit of: as GitHub for sharing materials be implemented manually: a (4) professional advice (1) three years imprisonment or on, and even guides on how to statement within the contract (5) compliance with legal orders (2) an unlimited fine run such projects. Details vary that you are relying on a certain Duration of obligation: as long as This example is structurally dif- (e.g. the emphasis on QA may be set of components, and some- the information remains confi- ferent from the confidentiality higher in a security project than thing to indicate when you’re ac- dential one, because criminal offences for Wikipedia, even if this slows tually doing so. things down somewhat). But they This would be clear enough for have a predictable set of ele- always involve building some Such a component could also be most people’s practical purposes ments. The kind of disclosure sort of community. automated, for example as an most of the time. The back- and filtering required should be add-on to a word-processing ap- ground text would cover all the tweaked for context, though ide- Would something like that be plication. Doing so would make usual clarifications and edge cas- ally with common design ele- culturally possible in law? Clear- it fairly trivial to save users from es. With a bit more effort, the ments. ly, not everyone would get it ini- common pratfalls such as speci- component could be linked up to As with the contractual example, tially, but is it possible for those fying “US” or “UK” law. “Govern- the requirements of specific laws there would be detailed support- who do to make sufficient impact ing law” might also have a unique e.g. affecting possible duration. ing text. for it to work, perhaps in niches code so that the user can see it as first but always with an eye to Such a component could be con- “proper law”, “applicable law”, If such a component is well-de- bigger possibilities? “choice of law” or a correspond- figured to have an even simpler signed, and its content kept up- ing phrase in another language. level of summary such as this: to-date, it should also allow you Implementation might take dif- Confidentiality: to compare the position between ferent forms: a library of freely That would be it so far as the or- countries much more easily than usable contract components cov- dinary reader is concerned, most Each party agrees to keep the is currently possible. ering whatever topics a viable of the time. other party’s information confi- dential. All of the above is readily achiev- community can form around. But, underlying it would be con- Limited standard exceptions ap- able, technically. It doesn’t rely Small clause-level components tractually binding text to ensure ply. on AI or any particularly fancy might conveniently be combined that the choice of law works as technology. But reliable and real- to create larger components to expected by a normal person, Or even: ly well-designed content striking cover more complex topics or taking into account specific local Confidentiality: Mutual. the right balance between sum- even entire transactions. quirks and practices, such as the Those three examples could then marisation and detail is quite a US practice of specifically exclud- There would always be a need for be combined: you can see an ul- difficult thing to build and main- ing renvoi and the growing EU some bespokery but, over time, tra-compact two-word version, tain, as illustrated by the limited practice of addressing non-con- common terms would become then expand progressively to see impact of many past attempts to tractual liability as well as con- accepted, with additions and im- the two longer versions, and fi- do something analogous (ranging tractual issues, in reliance on the provements being progressively nally the full glory of the legal from countless bespoke textual Rome II Regulation. made over time. text in its “plain and clear” un- summary projects to Mozilla’s In other words, the sort of thing readable wordiness. Stop when privacy icons experiment a Elements could be automated that no normal person needs to you’ve seen enough. decade ago). but with the role of natural lan- read, but which it’s useful to in- guage being retained for things It’s really a question of how far A significant problem is trust: if clude so as to avoid nasty sur- which aren’t feasible or desirable you want to take this approach in the content of such components prises and arguments. to automate fully. levels and the precise wording of is built by a particular party or The Devil’s Advocate 8 December 2020 Continued from p. 7 The component approach sug- cy. Add some fairly straightfor- Further reading gested here would probably not ward tech to present it conve- David Graeber: The Utopia of Rules: On Technology, Stupidity, be part of the official law, for the niently in human- and machine- and the Secret Joys of Bureaucracy (2015) near term: legislative and judicial readable formats, and allow peo- practices are understandably ple to implement it in their own Parliamentary Counsel’s Office, When Laws Become Too Complex conservative. But a trustworthy products. (2013) community could make sum- OECD: Reducing The Risk of Policy Failure I think it’s worth doing because maries available in a common succinctness and trust in this Philip K. Dick: Do Androids Dream of Electric sheep? (1968) format if effectively organised area, if achievable, are impor- and motivated. tant, not just economically but lematic in many ways as old thoughts and to prompt a discus- Legal component communi- also to counter the crisis of alien- school legalese. sion. Is it feasible? If so, how ties? ation from legal materials. Be- could it become a reality? Where spoke “plain English” which is so Could this approach work? My So that’s the idea. Make things and how would we start? really short by putting the details wordy that hardly anybody reads intuition is that it might just behind a curtain with a trusted it, and within which traps can be make the world a slightly better community to verify its legitima- hidden, is arguably just as prob- place. I’d be interested to hear

Know your carbs By “Flipper” Orzo

Some orzo, yesterday

An occasional series looking into lesser-known aspects of traditional carbohydration.

So that rice you get with kebabs in Mediterranean cooking (orzo in Italian, κριθαράκι in Greek; arpa ناسل şehriye in Turkish and and in Arabic) isn’t rice at روفصعلا all, but is tiny bits of pasta!

Orzo’s fluid identity has lead to some controversy in the metaphor department, and of the incident and the Carbohydrate Olympics, the less said the better. is ,םיתיתפ The traditional Israeli similar, but not the same, being typically spheroid rather than grain-shaped.

Have you got any pulse-related facts we could feature in future editions? Let us know, in confidence, by emailing us at [email protected]. Discretion assured! The Devil’s Advocate December 2020 9

When too much netting is bad for you The problems of close-out netting in commodities

Close-out netting is an article of faith for ISDA ninjas. For some of us, it is all we know. But what is very well in our imaginary swaps markets takes on a different pall when big ships full of sticky stuff are lumbering around the world’s congested shipping lanes. Marc Weisberger investigates, and to make sure you’re paying attention, there’s even a reader quiz at the end!

Close-Out in Derivatives often challenging a lawyer’s and paper trades with “master discharge terminal. You have Markets reflex to reach for a close-out netting agreements”; reducing sold that particular cargo to a notice template. whole trading relationships to a buyer on ex-ship terms. The Close-out netting in a derivatives single close-out number. credit department is pushing to market under an ISDA is In the world of raw materials, Unfortunately, this myopic focus terminate everything, but the (normally) a straightforward derivative “paper” positions are on “first-order” risk leads to a trading desk is worried about its exercise. used to offset price risk in dirty, collection of “second-order” exposure to the buyer. real-world physical positions. For If a counterparty defaults, the supply chain problems. example, suppose I am holding Thinking about second-order innocent party who is “in-the- gasoline in a storage tank A Real Life Example exposures, do you: money” terminates all its pending its shipment to a market positions with the defaulting So what would you do in the (A) Terminate both the on the other side of the world. In counterparty and sets off its following scenario (drawn from derivative and physical position that case, I may use OTC swaps termination receivable against the author’s back-catalogue)? under the master netting to protect myself against a fall in any collateral it holds. The agreement and claim $1.5m; the market value of the gasoline Your counterparty is in trouble. innocent party’s trading desk will pending delivery. If my OTC You have a master netting then try to “balance its book” by (B) Terminate just the derivative counterparty defaults, I can use agreement in place that allows adjusting its corresponding position and crystallise a $1m my ISDA to close out my original (but does not compel) you to hedges in the market. liability; swaps, take my collateral and re- terminate both paper and There may be some “slippage establish my hedge with other physical positions. Your exposure (C) Terminate just the physical loss” incurred in book-balancing OTC participants. But what consists of (a) a $1m out-of-the- position and claim $2.5m; as spreads widen on news of the happens if my physical money derivatives book and (b) a (D) Do something else, and if so, default, but total disaster is rare counterparty has problems? And physical oil cargo you have what? if derivative positions are also what should I do if I have both purchased, which is $2.5m in- hedged with derivatives. physical and paper exposure to the-money and which you have Answers to the same shaky counterparty? bought on open account terms [email protected] Close-Out in Commodities (i.e. you have not put up a letter with a follow-up discussion in Markets Ever since the Enron bankruptcy of credit for payment). the next edition of The Devil’s back in 2001, credit managers Balancing the book following a Advocate [if there is one – Ed]. and willing lawyers have been The oil cargo is making its way close-out in the commodities attempting to cover both physical across the ocean towards the market is a very different affair,

You are late

So Suez

Public Domain, https://commons.wikimedia.org/w/index.php?curid=55142 The Devil’s Advocate 10 December 2020 The Devil’s Advocate’s dictionary The language of financial services can be daunting, and not just to a newcomers: even twenty-year veterans struggle with complex things like “agency” and “indebtedness”. Here we extract a few cuts from the JC’s running commentary. More in the usual place.

Belgian dentist The event horizon — a point of /ˈbɛldʒ(ə)n ˈdɛntɪst/ (n.) no return — may well be some- thing innocuous like a virtual we- The continental equivalent of the binar about the impact on LIBOR man on the Clapham Omnibus; a remediation of the EMIR refit, fictional chap of Calvinist pru- such that we may not notice it upland to which all US attorneys with the ontological order of the dence who enjoys moules frites happening and, indeed, it may al- wistfully aspire, but which all semantic universe; to skew and a weekly tipple with his ready have. know, and thank their lucky hermeneutic space-tedium into friend, a netting specialist from a stars, they will never have to en- another dimension. law firm on Avenue J. F. 2. (Of commerce): A state in counter in person. Thus the Kennedy, and who invests his which all commercial activity has Donut (UK: Doughnut) words “bright-line test” are al- savings in definitive, bearer Eu- been vanquished by disclaimers, ways uttered in the negative, and /ˈdəʊnʌt/ (n.) robonds. boilerplate, and flannel — arrived at by means of a series of weekly with insincere remorse — e.g., A zero. Nought. Zilch. Nil. Every quarter, this fellow jour- all-hands conference calls — such “sadly, there’s no bright-line test Bupkis. Nulla. Bust. Sweet Fanny neys in his Citroën 2CV across that confusion has approached for this”. The logical impossibili- Adams. Bagatelle. Love. Null the border to Luxembourg, its asymptotic maximum and ty of a bright-line test is a US at- points. Nada. A big bagel — hold where he presents neatly clipped there is a state of zero free ther- torney’s means of evading any re- the cream cheese and lox. Zippo coupons to his issuer’s principal .Goose-egg .رفص .modynamic creative energy. sponsibility for anything she the Hippo. Nix paying agent, collects his inter- Commerce is no longer sustain- says, does, or commits to a ноль. Cypher. A whoreson zed; est, meets his Luxembourg able and collapses into a state of lengthy written memorandum of an unnecessary letter. An lawyer buddy at l’Aéroport complete ennui. advice. invitation to get your coat, that d’Hercule Poirot where the two may shortly precede an of them take a cheap flight to There is a school of thought that Cunisian instruction to do so. Malaga and decamp on a two- the boredom heat death of the /kjuːˈnɪzɪən/ (adj.) universe was only narrowly week coke-fueled bender across 1. Ambivalent; open to sugges- Financial instrument avoided during the implementa- the Balearic. tion. /fɪˈnanʃ(ə)l ˈɪnstrʊm(ə)nt/ (n.) tion of the securities financing Bloatware transaction regulations when a 2. Neither one thing nor the oth- Colloquially, a contract creating /ˈbləʊtwɛː/ (n.) cartel of well-meaning industry er (after John Arlott’s observa- finanical liabilities between two tion about New Zealand crick- 1. Computing (informal): Com- associations and their respective parties. It can, but need not, be eter Bob Cunis, 1941-2008). puter software whose marginal legal working groups jointly pro- negotiable, but its main feature Hence: to have “a Bob each way”. usefulness is outweighed by the duced a fifteen page, 5,000 word — its sine qua non — is that it cannot be created, maintained, colossal demands it makes on the document explaining the concept Deem CPU, disk space and memory. of title transfer. managed, looked after, trans- /diːm/ (v.) ferred, monetised or redeemed — To this day, financial institutions 2. Management consulting To be anti-cunisian (Q.V.); to it cannot move or breathe, in around Europe have whole de- (derogatory): Any human being treat the one thing as the other. other words — except through partments whose only function is employed in any control func- Demnation enfolds all a legal ea- the agency of someone who will to send SFTR disclosures to each tion. Popular amongst those in gle’s intents and each of her pur- deduct a fee from the proceeds of other. Once a year, at Christmas, the COO office. Would be fair if it poses. It is of a piece with the your investment for the privilege. their email batteries fall silent were not also true — especially equivalence we crave when, un- and they meet atop the trenches true — of those in the COO office. der a stock loan, we return an as- In Toto for a game of football in No- set that is, but simultaneously is ɪn ˈtəʊtəʊ/ (adv.) Boredom heat-death Man’s Land. /ˈbɔːdəm/ /hiːt/ /dɛθ/ (n.) not, the one we borrowed. It is 1. A quality possessed by Steve Bright-line test the means by which we get com- Lukather, David Paich and Steve 1. (Of the universe): A plausible /brʌɪt lʌɪn tɛst/ (n.) fortable saying that a eurobond, Porcaro, and once possessed by ultimate fate for all of creation is being of the same type and class, (American). A conceptual exer- Jeff and Mike Porcaro, lords of that it is to be entirely consumed and forming part of the same se- cise bestowing so great a degree rock rest their gnarly souls; by flannel, such that the universe ries as but, all the same, ontolog- of confidence in the mind of a US 2. Where dinner is, when Uncle itself collapses into a state of ir- ically, distinct from, another one attorney that it cannot, as a mat- Henry gets back late from a ses- retrievable confusion entropy, is, nonetheless, “the same” thing. ter of metaphysical, much less le- sion with his buddies on the and the end of days is upon us. We “deem” it to be so. Hence gal theory, exist. moonshine; This will not be a bang, nor even Demnation (n.) The art of deem- a whimper, but just a gentle set- A bright-line test is a kind of un- ing; of construing a thing as 3. A pompous way of saying “the tling into a state of inanimacy. achievable Platonic form; a sunlit something else. To mess around whole shooting match”. The Devil’s Advocate December 2020 11 Indemnifier it for someone else, while dis- nished pragmatism which boy known to screech “rehypotheca- /ɪnˈdɛmnɪfʌə/ (n.) claiming necessary knowledge to wizards will — or at any rate tio!!” at passing CASS compli- competently answer the question should — deeply envy. ance auditors. 1. One who, out of a surfeit of in- by herself; and (ii) having the caution or deal fatigue, has un- Muggle Unknown unknown tactical acumen to throw just derwritten every minor calamity such a hospital pass without any- /ˈmʌɡ(ə)l/ (n.) /ʌnˈnəʊn/ (n.) her counterparty may suffer; ev- one twigging that she has done it. (Derogatory) One who is not Something that you don’t know ery debatable opportunity it may legally qualified. May include that you don’t know, as once ar- forgo, and every extraordinary The person who proves best at those from sales, credit, COO or ticulated by Donald Rumsfeld. expense it may incur, however ir- this behaviour over a sustained just randoms you meet on the rational, in the performance of period of time gets to be “general This, of course, presents an im- street each day. the contract between them. counsel”. mediate paradox, because if you Could also be used to refer to know that you don’t know that 2. (Unusual) One who has Mudblood those gigging Bulgarian school- you don’t know something — agreed, in full knowledge of the /mʌd blʌd/ (n.) leavers sitting in a call centre in which for you to be talking about facts, to be responsibile for a (Derogatory) A compliance offi- Sofia with a playbook propped up unknown unknowns, you must, well-quantified and clearly-artic- cer, paralegal or ISDA negotia- on their knees as part of an off- then this is a known unknown ulated externality that its coun- tor. One with some legal training shoring operation, though where unknown, which I rather think — terparty may suffer while provid- but no practising certificate. they are paralegals, “mud- but to be clear, I don’t know, as ing an incontrovertible benefit to blood” (Q.V.) is the more com- such — must be a variety of a the indemnifying party, through To the chagrin of those who do mon deprecatory term. normal known unknown. Which no fault of its own. hold practising certificates, Mud- bloods are quite capable of sur- Great fun can be had at the ex- makes it an unknown known un- Inhouse counsel prising you with deep legal in- pense of muggles when it comes known unknown. Since I do /ˈɪnhaʊs ˈkaʊns(ə)l/ (n.) sight — often into things you’ve to counter-intuitive legal con- know that I am not sure about this I can confidently, and with A breed of wordwright whose overlooked — and more impor- cepts like branches, corporate some relief, rest my case at a chief expertise resides in (i) tantly, with decades of experi- personality, title transfer collat- known unknown known un- knowing enough about the law to ence in the markets, have seen eral arrangements, the basic law known unknown. frame a sensible question about everything, are fazed by nothing of contract, or the local council. and possessed of a deeply bur- Prime brokerage counsel are

Bridge noir

blow. “I ... I just ...” Who’s got the Now his own man throws one King of out. “What? You just what, Hearts? Howard?” Steve fig- Poor Northie is cooked. He stubs ured his cheroot and shakes his head. South “You bought it, Marv. It’s all wouldn’t yours.” have K♥ 3♣ it is. Game on. for his West to lead pre-empt. Steve Root led off as West. North ob- viously The Bidding This pair, North and South, they had some- were players. World class. Ninja Your partner, East, opened with thing grade. Steve could see it in their a pass. South immediately made tasty – that hesitation in his bid- eyes: they thought they had it in a frisky pre-empt to 3♣. Cool as ding spoke volumes. Did North the bag. He needed a lead that South figured West held A♥, so you like, you passed. Super casu- have K♥? held back K♥. Steve took the al. Well – were you going to bid would rock that cosy world. If North didn’t have K♥, Steve trick with Q♥ then switched up 3♥, your partner a passed hand He studied his hand. He studied knew East probably did. Proba- to 9♦, which East won with Q♦, and all? If East saw that, got the board. He studied their eyes. bly? What were the odds? It’s a and then East played ♥ back to over-excited, came back with Then he saw it. There it was. It 95% play it was one of those two. Steve’s A♥. Bullseye. Contract some crazy-ass ♠ bid and boom was slim. It was outside. It was It ain’t going to be South. down. — you’re down 1,100 big ones. crazy. But it might just work. Steve reckoned: “If North has K♥ That’s 2 ♥ tricks, a ♦ and two ♣ So you played it cool. All eyes Steve knew it was the only play and I lead Q♥, there’s no way tricks to the defence. now on North. He’s wary. There’s to bring these hotshots down. South will peg me with A♥. Only sweat on his lip. He has a wide South sat in silence. Steaming. But could it work? He ran the tip a moron would lead Q♥ if he had look in his eyes. “I ...” he mum- North was babbling. “What … of finger over his fan till it settled A♥. But look: if my guy East has bles. just ... happened?” on Q♥. K♥, we lose nothing. You lean in. East leans in. South A QUEEN OF HEARTS LEAD? Let’s do it. Steve flipped down leans in. The table encroaches. Crazy. She was calling, but Steve Q♥. Cool has you like. It’s oppressive as hell. knew she could cost him bad. An Northie is dry. He swallows. overtrick, easy. Bridget Rampton founded the Muswell Hill Bridge Club in “Yes?” Your boy East cranks up Steve looked at North and South 2019. It’s gone mad in Lockdown. Introduce yourself this the pressure. and figured this was on. But it baffling game with her BridgeTalks videos. Get in touch with Northie looks like he’s going to was all about the King. Bridget at [email protected] The Devil’s Advocate 12 December 2020

Life Lessons from Cool Runnings It’s ChristmasMovie time,and RobinAI’s Richard Robinson shares some insights from the unbeatable Cool Runnings

As the youngest child in a Ja- that his father, a wealthy Ja- they immediately find them- maican family, it probably won’t maican businessman, will not re- selves in difficulty. While (defy- come as a great surprise that one spect his career choice. Yul takes ing everyone’s expectations) the of my favourite movies growing Junior aside for a motivational team had been flying in practice, up was Cool Runnings – the un- speech. His words are not magic: when they walked on the Ice in derdog story of the first ever Ja- Yul explains that when he looks Calgary their performance didn’t ger. In his pursuit of excellent maican Bobsled team. What at Junior he sees pride and pow- measure up. During a post-run Derice succumbed to exactly that might surprise you though is that er, but what Yul sees doesn’t de-briefing, Coach Blitzer temptation. But Sanka’s right. If as an adult, coach, entrepreneur matter. What matters is what Ju- (played by the brilliant John you strive to be successful, it and now business leader I often nior sees. It’s only when Junior Candy) reminds the team that makes sense to emulate the be- find myself returning to the believes in himself that he can they know all of the turns, haviours of those we aspire to, movie’s deep and profound life truly lead his own life and stand they’ve practiced sufficiently, but but never let that compromise lessons. up to his father. the one thing he can’t teach them your identity. Never forget who Though the movie strays from There is a lesson in this for any- is how to “stay loose out there”. you are. the historical account, I often re- one who acts as a mentor, coach Anyone who has taken part in If you’re not enough without cite these lessons to those unfor- or friend. The antidote for low competitive sport knows that the it... tunate enough to be under my self-esteem is to help others to difference between training and The evening after the team tutelage or direction, and now I see their own strength, skill and competition can be huge. In record a time that shocks the want to share my favourite hid- uniqueness; that’s when fortunes sport and life, practice is a neces- world and puts them in 8th den gems from this wonderful change. sary precondition to success, but place, Coach Blitzer and Derice family movie with the world. I can’t teach you to stay loose it’s not sufficient. And you must share a quiet moment. Derice I see pride out there always be ready and flexible asks why Coach cheated to win enough to ditch whatever you gold when he competed at the Junior is ashamed to be in the When the team arrives in Calgary had planned as circumstances Bobsled team, because he fears for the Olympic qualifications Olympics for the US team. Coach change. As Coach Blitzer says, said that it came from his com- you practice so you have the pulsion to win, and that craving comfort and certainty when it re- the validation of the gold medal ally matters that you have the consumed him. But in explaining skills and the judgement to per- (and taking responsibility for) his form. So you gotta stay loose out ways, the Coach teaches a pro- there. found lesson: while gold medals I didn’t come all the way up are great things, “if you’re not here to forget who I am enough without it, you’ll never be Throughout their time in Cana- enough with it”. da, Derice (driver and team cap- Throughout my career I’ve seen tain) is inspired by the Swiss people subject themselves to team’s professionalism and tradi- pressure and tasks and jobs they tion. But after several embarrass- don’t enjoy in the vain hope that ing performances, Sanka identi- they will achieve some status, fies the issue: The team are try- win some award, or get some ing far too hard to emulate the promotion and it will all be worth Swiss. Sanka explains to Derice it. It won’t. Sure, accolades, vic- that the only way the team will tories and successes are nice, but perform at their best if they stop they’re also fleeting, and they acting like the Swiss, and instead won’t make you whole. And while “look, walk, talk [and]… bobsled it’s true that no success can come Jamaican”. without enduring some hardship, I am certain that anyone who if you don’t enjoy the journey, knows how it feels to be a minor- you should get yourself on a new ity, or to be the only woman in a one. boardroom, or the only person of Put another way, you should colour in a company, knows the strive in everything you do to deep temptation to imitate others have Cool Runnings. that imposter syndrome can trig- The Devil’s Advocate December 2020 13

Post Office Sub-postmasters can appeal against convictions as an “affront to the public conscience” Corporate lawyer Lindsay Healy found his firm in unchartered territory, acting pro-bono for three convicted sub-postmasters. But last week they had a famous day in court. Last week, we were in the Court innocence. Forty-seven criminal In November 2020, we found of Criminal Appeal fighting for convictions were referred to the a “smoking gun” document our 3 clients for whom we are Court of Criminal Appeal to be from 2013: the “Clarke acting pro bono. They have been overturned, on two grounds: Advices”. This might suggest that wanted to pursue the affront to to hell and back, have had huge Lack of disclosure: that the Post the Post Office knew it had the public conscience: obviously, legal fees against them and they Office’s failure to disclose prosecuted innocent people. the Post Office didn’t (what kind needed a break. That’s why we important information meant I have to be careful with my of loveable British institution did it, and because we could. the convictions were “unsafe”; words here, so I’ll quote the Post wants to be seen as a vengeful malicious prosecutor?) but nor It is odd for Aria Grace Law to be Affront to public conscience: Office’s own lawyer Brian did most of the other victims’ in the centre of the “biggest that because the Post Office Altman QC: lawyers, as they wanted to do miscarriage of justice in British knew its data was unreliable, and “Mr Gareth Jenkins, an expert this later in the civil courts. history”, given that we are a two- knew it should not be witness [for the Post Office and year-old corporate firm: we don’t prosecuting but did so anyway, Fujitsu], in many of the But our clients wanted to be do litigation and we certainly the prosecutions were an prosecutions may have failed to properly vindicated: not just that don’t do criminal law. However “affront to the public disclose information, that he was the Post Office didn’t give them there we are, helping Seema conscience”. well aware of, that Horizon [the the documents they needed to Misra, Tracy Felstead and Janet clear their names, but that the Many wanted to fight on the first Post Office system] has bugs and Skinner: three people Post Office knew they were ground only. With this they errors in it.” imprisoned for crimes they did innocent and prosecuted them could overturn criminal One reason I have to be careful is not commit, prosecuted by the anyway. convictions and move on to civil because, on 18 November, we Post Office though it knew they proceedings. effectively lost our entire So there we were: a corporate were innocent. firm, with no litigation or On behalf of our 3 Clients we barristerial team for potential Seema was imprisoned on her criminal pedigree, without our argued for the second ground “contempt of court” – to be son’s 10th birthday, eight weeks two amazing barristers, with two because a finding of a mere lack decided by a different court pregnant. She gave birth in brand-new barristers, one of of disclosure would not after the appeals (if at all) – shackles. An innocent – like the whom could not make it to court. completely vindicate our clients. after our lead barrister was rest – there but for the Grace of Lisa Busch QC was our last It might imply they were guilty accused by the Post Office of God go any of us. flicker of hope, in a wild but just could not be prosecuted. giving the Clarke Advices to the hurricane against us. And we To explain what we were fighting An “affront to conscience” would police and had to stand down. won. about: after a massive win for be a complete vindication of Two days before trial, we had to the Post Office victims last year their position and given what find new barristers, get them There is a way to go, but the path in the High Court (557 in that happened to them. They would briefed and set them off against, to justice is still well and truly case but over 900 in all), be declared innocent. literally, everyone: no one else open. effectively declaring their Christmas essay: common law, precedent, Duchamp’s pissoir and Plato’s cave We couldn’t let you go without a rumination from the old sod about truth, certainty, time and urinals. It all starts off with with West Midland Baptist Trust, as you would expect.

The question of whether a court, was thrown into sharp relief by sory acquisition: “We cannot say having to its horror realised that the Lehman insolvency, and in that the law was one thing yes- it had been wrong about the particular Re Spectrum Plus. terday but is to be something common law for decades, could The answer was “No”, as it different tomorrow. If we decide agree to uphold its new, “cor- turned out. that [the existing rule] is wrong rect” understanding of the same we must decide that it always The traditional approach had issue prospectively only, thereby has been wrong. ... But that of- stated crisply by Lord Reid in leaving undisturbed those good ten happens when an existing West Midland Baptist (Trust) citizens who had been relying on decision is reversed.” Assn v Birmingham [1970] AC its bum steer up to that point 874, a case concerning compul- Later on, Lord Nicholls said: The Devil’s Advocate 14 December 2020

“Whatever its faults the retro- Well, bear in mind the starting however excellent, are only hu- Now if it may not be it, it cannot spective application of court rul- presumption of common law ju- man. It is not beyond contem- be it: at best a decision is a ings is straightforward. Prospec- risprudence is that it is not plation that they might make a derivative of the law: a shadow, tive overruling creates problems judge-made, but judge-discov- bish of things. flickering on the grotto wall, illu- of discrimination. Born out of a ered — an objet trouvée, invert- What if, in doing so, they reveal minated by Plato’s unseen can- laudable wish to mitigate the ed, signed and exhibited as is. the hidden wire that delivers our dle. seeming unfairness of a retro- Judges are merely expert sculp- jurisprudential conjuring trick? So here is the paradox: an insis- spective change in the law, tors, revealing to the world the Where does the idea of the com- tence on certainty at all costs in- prospective overruling can beget Platonic details of the law as mon law even come from? Could cludes the cost of certainty itself. unfairness of its own. they find them, as Duchamp did someone have made that up, If West Midland is right, being “This is most marked in criminal when exhibiting his Fountain. too? Could it be, after all, that itself laid down by a decided cases, where ‘pure’ prospective Like R. Mutt’s pissoir, the law the law is a social construction? case, it must by its own lights, be overruling would leave a suc- was always there — it just took a Should we look under our foun- wrong. It is not the law. It is a cessful defendant languishing in craftsperson of sufficient skill dation to see if we can find any fallible judge’s impression of the prison.” and enlightenment to reveal it in turtles? Careful: our very episte- law. It is as susceptible of false- While the court didn’t rule out all its artistic beauty. mological foundation might fall hood as the judgment which it the idea of prospective overrul- But also bear in mind another, apart on closer inspection. overturns. Only if it is wrong ing —“‘Never say never’ is a wise apparently consistent presump- Since newly decided cases over- can we have any certainty that it judicial precept, in the interests tion: the common law’s funda- turn old ones, and the law does is right. of all citizens of the country” — mental value is certainty. apply retrospectively, then by So, if you organised your affairs this present case was “miles Now, the JC has his own views the jurisprudence of the law, a in reliance on what you, and ev- away from the exceptional cate- about exactly when certainty as a rejected authority was never the eryone else including the judicia- gory in which alone prospective virtue shifts from boon to bane, law, even when everyone agreed ry earnestly believed to be the overruling would be legitimate”. but we can agree merchants it was. But if so, then the device “golden stream”, but which a lat- Goedel’s undecidability need some idea that the legal by which one discovers an old er revelation shows to have been applied to the common law foundations underpinning their law isn’t the law after all, and a a bucket of piddle, well that’s This question — should a “newly commercial arrangements are contradictori new law is the law tough. But, therefore, you can’t decided” thread of common law not liable to shift. is, itself, a judge-made decision. rely on the later revelation of the apply to human affairs pre-dat- Hence, while statutes are trans- It is no less prone to reversal. In law either, because it, too, might ing its development which were parently the creatures of men most cases, c’est la vie — that fee turn out to be a bucket of piddle. specifically constructed in con- and women and will not, without of small-time volatility buys a Which means perhaps you can templation of common law prin- grave justification, be applied greater sense of overall meta- rely on the old precedent, as it ciples which, the new authority retrospectively, the common law certainty. might turn out not to have been has adjudged to be wrong? — ar- is hewn from more ontologically But not here: the very jurispru- a bucket of piddle after all. But ticulates the same paradox by rigid stuff and suffers no such dential principle West Midland as long as this new ruling isn’t which Kurt Gödel buggered up legislative fickleness: it is un- Baptist (Trust) Assn v Birming- considered to be a bucket of pid- David Hilbert’s aspiration to de- changing, for all times and for all ham “reveals” is that wider dle, you can’t. scribe a complete and consistent people. meta-certainty: that the com- O tempora! O mores! O para- set of all mathematic axioms. We just might be temporarily mon law, as laid down by a de- dox! How so? mistaken about it. For judges, cided case, may not be the com- mon law after all.

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