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A settlement reportedly could cost McCartney, 65, up to $120 million in a lump sum payment to Mills, 39, plus annual financial support for their daughter, Beatrice, who turns 4 this month.
Mills arrived at an annex of London's High Court first and McCartney followed shortly after. An eyewitness told PEOPLE, "He seemed relaxed, quite smiley, not at all rattled."
The court is closed to reporters, and, so secret are the proceedings, four chairs block the entrance and the door's peep holes are taped.
The couple split in May 2006 and McCartney filed for divorce two months later. They last met in court in March and are using the same divorce lawyers as Prince Charles and Princess Diana.
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