I love this idea. Especially the end-to-end encryption for data that passes through a server to enable the ease of cloud computing without relinquishing data ownership.
It also depends on _who_ owns the data. In an enterprise environment the company usually has a vital interest in the data and on-premise deployments are a good way of retaining cloud computing without giving up data ownership. I'm surprised that more SAAS products don't offer on-premise given the privacy and ownership benefits. The tricky part there is making software that is easy to deploy and maintain, which might be the reason that it isn't done more often.
A product like Grammarly that allowed on-premise deployment would side-step a lot of the issues with sending all that data to a third party. I can't imagine a law firm ever being able to (legally) sign up for that.