When should I use a local model instead of a cloud LLM API?
Category:LLM Privacy & Compliance
Quick Answer
Use local models for: medical records (PHI), financial data (PCI), government/classified data, legal documents, any data you cannot legally send to third parties. Use cloud APIs for: public data, after PII redaction, general knowledge queries.
Detailed Answer
Use local models when:
- Processing medical records (PHI)
- Handling financial data (PCI)
- Working with government/classified data
- Summarizing legal documents
- Any task with data you cannot legally send to third parties
Use cloud APIs when:
- Processing public or non-sensitive data
- After PII has been fully redacted
- For general knowledge queries
- When performance/quality requirements exceed local capabilities
Practical hybrid setup:
def route_to_model(prompt, data_classification): if data_classification in ["CONFIDENTIAL", "PII", "PHI"]: return call_local_model(prompt) # Ollama elif data_classification == "INTERNAL": return call_cloud_model(redact_pii(prompt)) else: return call_cloud_model(prompt)
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