(FORTUNE Small Business) – Despite his dark suits, regimental ties, and retiring manner, David Ambrose is a revolutionary. He runs a small law firm in Portland, Ore., that has carved out a profitable niche in the field of real estate finance. Even so, the seemingly diffident attorney wants to reinvent nearly every aspect of his business.

Ambrose hung out his shingle 14 years ago. At 52 he craves more intimacy with his clients. Several of them have grown from one-man shops to big-league mortgage banks, and Ambrose revels in their success. But his most successful old clients are now large enough to hire in-house counsel and dispense with his services. Some newer clients don't generate enough revenue for the firm, while other relationships, one gathers, are simply tedious. He hopes that new technology and better management will help him land more satisfying and lucrative legal work. Like most professional services firms, Ambrose Law is also grappling with a fundamental revenue issue: How do you bill by the hour when technology shrinks the time it takes to accomplish a task?

FSB brought in three consultants to help Ambrose ponder these weighty questions. Ron Baker, co-founder of the VeraSage Institute in Petaluma, Calif., is a recovering CPA who travels the globe exhorting accountants, lawyers, and other professionals to get away from hourly billing. Digital guru Scott Randall is the CEO of Advanced Legal Systems, an Oregon-based company that specializes in tech consulting for law firms. John Rapp is founder of the Emerald Education Group, a Seattle firm that provides continuing-education services to lawyers and other professionals.

Ambrose already charges flat fees for some of its more straightforward legal services. The firm is more profitable when it bills by the job instead of the hour. But what if a flat-fee job winds up taking up more hours than anticipated? "There's trepidation, because it's such a change in a fundamental aspect of the business," says Ambrose.

Baker argues for full speed ahead. Billing by the hour is expensive, he points out via speakerphone. "Studies show that feeding the beast--keeping all those bills up to date and getting them out every month--costs 5% to 10% of the typical firm's gross revenues," he says. "Why not set a price up front, discuss it with the client, and shake hands? There's less dispute, and you get paid quicker." What if clients balk? "Anybody with a budget will embrace the idea," he says. If they're still leery after it is explained to them, just terminate the relationship. "I don't get to tell the airlines how to price their tickets," Baker says.

Ambrose isn't entirely convinced. "It's going to take a lot of time up front for us to come up with the proper figures and pricing for a big job," he frets. "I expect we will make mistakes and have losses." Baker agrees: Lawyers and other professionals are rarely good at quantifying their own value. So why not hire a staff pricing expert who can gauge what each service is worth to the client? "People who aren't good pricers shouldn't be pricing," Baker says.

The firm could also extend a money-back guarantee to clients who accept flat-fee pricing. "With a satisfaction guarantee up front, you can command a premium price," he says. Besides, unhappy clients are usually unhappy for a reason. Ambrose likes that idea. He'd wind up cutting the bill for an unhappy client anyway, but doing it through a guarantee could help preserve goodwill on both sides. "When you have to write it off after a dispute, everybody is left with a bad taste," he says.

The next item on Ambrose's wish list is equally ambitious. He wants secure technology that will allow clients to dive into the firm's computers and pull up their key files at any time. Sitting in the firm's book-lined conference room overlooking the Willamette River, Ambrose explains his dream to Scott Randall. The quiet, slightly built tech consultant responds with a simple but important question: "So this benefits the bottom line?" Chief operating officer Janis Alexander explains, "It will be convenient for everybody. And it might prompt clients to move more business to us."

For the next three hours, Randall peppers the two with questions, typing their replies into a laptop. What's the staff turnover? Does the firm's compensation system reward a lawyer who takes time off from billable work to master new computer skills? Does the company routinely upgrade to modern equipment or stick with old technology as long as possible?

Randall spots some problems early on. Would Ambrose want clients to see draft documents that the attorneys are still writing or only the final versions? How will the computer system know which documents are available to which clients? Can Ambrose limit unauthorized access without creating extra work for the staff?

Randall's main conclusion: Ambrose must beef up security before giving clients online access to their files. "By opening and publicizing remote access, the firm will increase its visibility and become a larger target for hackers," he tells them in a three-page strategy memo submitted after the meeting. To minimize the risk of a destructive hack attack, Ambrose should improve data encryption, demand more complex passwords, and require those passwords to be changed more often. Nor should clients have access to the firm's main computer network, as that may tempt them to rummage where they shouldn't. Instead, Ambrose should create a "demilitarized zone," or DMZ: a figuratively walled-off server where clients will be able to view only those documents that Ambrose has cleared for release. All documents on that server should be in PDF format, to avoid formatting problems that can arise when attorneys and clients use different word-processing applications.

The final consultant, John Rapp, is a large man with the air of a friendly, rumpled professor. He spends several minutes arranging a slew of dog-eared and sticky-noted books around the conference table. "I can't promise to make you richer," he jokes, "but I can make you smarter."

Rapp spent much of the four-hour train trip from Portland to Seattle preparing his presentation. His job is to help the Ambrose Law Group build closer relationships with its clients. Janis Alexander explains that the firm wants to develop very strong bonds with a handful of clients rather than juggle a zillion little ones. David Ambrose adds that he wants everyone on staff to get better at understanding the needs of their clients.

Much of Rapp's advice could pass for marriage counseling. Simply sitting down with clients and asking what they're up against can work wonders, for example. "Clients won't care how much you know until they know how much you care," he says folksily. And Ambrose should never bill the client for handholding time. "Clients believe in non-billable hours more than billable hours," he adds. Occasionally, Ambrose might even suggest that a client send a particular job to another firm with specialized knowledge or better pricing. "Set yourselves up as the learned intermediary," he proposes. "Few things build trust like passing up work for the good of the client."

Like any professional service, lawyering can sometimes be dull and repetitive. Clients soon sense if an attorney is less than enthusiastic about his work. So it's in Ambrose's best interest to track the morale of the staff, top attorneys especially. "Periodically challenge yourselves by seeking more demanding work," Rapp says. In addition to handling commodity jobs such as loan documents, Ambrose Law already tackles complex projects such as structuring private placements and mezzanine financing deals. Focusing on that kind of work will keep life interesting for Ambrose and his colleagues. It's also a great way to recruit young talent to the firm. "Nothing attracts lawyers like a reputation for high-end work," he adds.

Rapp supports Ambrose's desire to pare his client roll. Basically, the firm wants to "make sure everyone on staff knows who the jewel clients are," he says, "not just the 800-pound gorillas--the ones that make trouble and smell bad." It's also important to gauge the health of client relationships. Rapp calls that the relationship-protection index. "How often does the workload from a client slow way down, and nobody notices?" he asks. "Keep an eye on that. Or track referrals a client makes about you. What does it mean if in 12 months a client never sends anyone to you?"

It was late on a Thursday afternoon when Rapp broke off. Someone (not me) said they were in the mood for champagne, so we all retreated to a fancy bistro nearby. Even there, Ambrose remained serious. "We're taking on an awful lot at once, and I don't think I'm kidding myself about how challenging it will be," he mused over his glass.

A few weeks after the makeover, we checked in with Ambrose Law to find out what was new. Alexander says the firm plans to shift most new matters coming into the firm to flat-fee billing, as Ron Baker recommended. Ambrose Law has hired Scott Randall's firm to upgrade the entire system. Down the road they hope to implement a secure, automated client-access system. And they couldn't agree more with John Rapp's advice to focus on specialized, high-end legal work. In the weeks after the makeover, Ambrose Law handled several mezzanine transactions and private placements, and it plans to do many more in the future. We'll keep an eye on the firm and report back on their progress from time to time.