The Lord Chancellor yesterday hailed the impact of alternative business structures in driving competition and fostering innovation in the legal market.
David Gauke also praised the way that law firms are embracing technology to maintain the UK's international position.
In a speech to mark the launch of lobbying group TheCityUK's annual report on the legal market, Mr Gauke noted that Deloitte had this year become the last of the Big Four accountancy firms to set up a UK legal practice.
"We have also seen PwC's UK legal practice reach a headcount of 320 and generate revenue of £60m. That puts it just outside the UK's top 50 law firms in its own right.
"The entrance and growth of alternative business structures has provided additional choice for consumers, driven competition and fostered innovation, and in part played a crucial role in maintaining the attractiveness of our jurisdiction.
Mr Gauke said the legal services sector was "in good shape" but needed to embrace technology to maintain its position.
"As the report rightly points out, the technological shift and the need to be at the forefront of innovation so as to maintain our competitiveness in the digital age, is something that is well recognised here in the UK.
"That is absolutely crucial because we know that our international competitors – ever keen to get ahead of us – have made that same realisation. As one example, look no further than Singapore's Future Lawyers Innovation Programme.
He highlighted Norton Rose Fulbright's recently launched artificial intelligence-powered chatbot, named Parker, which helps clients from non-EU jurisdictions understand their GDPR obligations and determine whether it applies to their business.
He was also pleased to see collaboration on lawtech, such as the Accord Project, which brings together 40 top law firms, the Law Commission, standards institutions, professional associations and blockchain companies with a view to creating a legal and technical framework for smart legal contracts.
Mr Gauke continued: "Furthermore, while Barclays Eagle LawTech Lab provides a home for a lawtech ecosystem in London, lawtech is far from a London phenomenon.
Then there was the government's £700,000 grant to support the Solicitors Regulation Authority's data-driven innovation in legal services project, and backing this week for research into the potential for AI to improve the legal system.