purplesneakers I have been following this thread with interest, mainly because of your very mature approach and willingness to consider the advice offered by experienced grans and mils. It is clear that you would like the relationship with your mil to improve, but not sure how.
I have a few points to make. I would endorse the pleas from many of the grans to consider how excited your mil is to be a gran for the first time. You will see on here how many of us post of our joy at the safe arrival of new grandchildren. This is not to say that we feel we 'own' our grandchildren but that it is a special relationship. I was astonished at the rush of pure love I felt for my first grandson, and for each of the other 5.
My next point is that you, your DH and your mil are all new to the role of parent/grandparent and are still discovering what is expected of that role. You and DH are naturally protective of your little one, and are naturally reluctant to let her be away from you for any length of time. Your mil has probably forgotten that feeling and maybe needs a gentle reminder.
What you and the posters from MN perhaps don't quite appreciate is how that protective feeling for children never goes away, and many parents can find it difficult to step back and let their adult children get on with it and make their own mistakes. It is a learning process that goes on from you first leave your little one/s with someone else, through to seeing them start school, the difficult teenage years and seeing them leave home. Some parents have more difficulties accepting this than others. We all make mistakes and you young parents will too.
Also remember that you too may find yourself in the same position of being a grandparent in the future. It is a relationship that can be so rewarding, but cause a lot of heartache. Just read the many stories on here.
I would suggest you explain to your mil what you have to us, that you and DH need to have space to become parents but do gave your mil a chance to explain how she feels too, if that is possible. As a lawyer, I know you are able to evaluate both points of view and come to some sort of arrangement that will suit you all.
It saddened me to read that one poster thinks that the older generation of the family don't matter. My children benefitted enormously from their contact with their very tolerant grandparents especially time, which their busy parents often found difficult to find. I hope my grandchildren benefit from their contact with us. They have given us so much.
Good luck!