Learning to Refer: Client-Resolved Generation for Privacy-Aware Language Models

Cloud-based large language models (LLMs) require users to disclose plaintext data to service providers, creating privacy risks in sensitive domains. Existing privacy-preserving approaches often trade utility for protection, incur substantial computational or communication overhead, remain vulnerable to reconstruction from intermediate representations, or protect only a subset of the training and inference pipeline. We introduce Client-Resolved Generation (CRG), a genera- tion interface that separates server-side generation from the lexical realization of input-derived content. The client transmits only pooled and noise-perturbed rep- resentations, while input-derived output content is represented using request-local positional references and resolved to its original strings only on the client. This interface protects private input and input-derived output content during both train- ing and inference while allowing the service provider to keep its proprietary model parameters hidden from the client. At the same time, exact lexical reuse remains possible without directly exposing the reused content on the provider-visible gen- eration path. We evaluate CRG on medical and document-grounded QA, sensi- tive identifier transfer, and tool calling, together with reconstruction and raw-logit leakage analyses. On SealTools, CRG improves complete-call exact match from 57.3% to 79.9% over the input-privacy framework PPFT, with larger gains as more required output content can be resolved through references. Together, these results show that CRG provides a practical interface for privacy-sensitive cloud LLMs by reducing plaintext exposure across both input and output pathways while preserv- ing task utility and server-side model confidentiality.