Katie Holmes and Tom Cruise
07/07/2012 at 04:00 PM EDT
For much of the past few days, lawyers for Tom Cruise
and Katie Holmes
have been working behind closed doors to iron out an agreement
between the two stars that would avoid a long, public divorce fight
Cruise "doesn't want his family dragged through the mud," says one source. "They both love their daughter."
One crucial issue: where Suri, 6
, will live and who will raise her.
Holmes, 33, who filed for sole legal custody, would like to bring up her daughter in New York City. Cruise, 50, lives primarily in Los Angeles, although he owns properties in Manhattan.
Sources around Cruise and Holmes are optimistic that the couple and their legal teams
could reach a deal as discussions continue.
For the second day in a row, Holmes was spotted at her lawyers Allan Mayefsky and Michael Mosberg's offices on Saturday.
As for Holmes's bid for custody
, Cruise may be open to Suri living primarily with Holmes, according to a source. But any agreement would have to include generous visitation for Cruise: "There's no world where Tom won't be seeing Suri."
"I'm sure Tom Cruise's attorneys are doing all they can behind the scenes to negotiate with Katie's side to calm the situation," says L.A. family law attorney Steve Mindel, who's not involved with the case. "Ultimately, neither side would want a messy public case to avoid bringing emotional harm to their daughter. Don't be surprised if Katie quietly retracts her divorce filing and they eventually agree to an amicable divorce and settlement."
Reporting by KEN LEE