You can give a ship to the Pirate, which he will use to plunder your competitors' ships and share the loot with you. He will not attack your own fleet, as long as you don't damage his ship. Crayers and Snaikkas are the preferrable ships to use.
Usually there can be up to five active pirates in the Hanse, so hiring pirates is a good tactic that will prevent your fleet from being harassed.
"You can commission up to 20 pirates"
- Baltic Trader
The Pirate is an Underworld character, talking to him is considered a criminal offence and may result in a fine if somebody notices you!