The lag turn is used after a merge to gain an advantage on your foe and to place your plane in his six o'clock position. The lag turn is useful if you are moving faster than he is or if your plane can't out-turn his.

Turn into the enemy, but not tightly, and allow your plane to drift wide. As you lose momentum, begin tightening your turn, throttling up as you go.
Never lose sight of your enemy! You should drop airspeed to just above stalling to maintain the tightest turn possible, pulling all the way back on the stick. Then apply full throttle to stay above stalling, and keep the stick back.

Drawbacks:
This may allow your foe to gain more distance over you, if you bleed off too much speed in the turn.
The window of opportunity for performing the maneuver is small and allows for little error.