An iterative Finite Element method predicated on a linearization of the weak form around a reference configuration is derived for general, three-dimensional, free-surface flows, including systems with arbitrary contact angles. This sharp-interface method is a rigorous generalization of the Total Linearization Method that was proposed by Kruyt et al. (International Journal for Numerical Methods in Fluids 1988; 8: 351–363) for two-dimensional flows with contact angles limited to 90◦. In contrast to existing numerical methods for free-surface-flow problems, the present linearization produces a weak form that is devoid of displacement degrees of freedom in the bulk, thus nearly halving the size of the linear system when compared to standard linearized methods. A novel preconditioner, whose implementation is made possible by the size reduction, is employed to solve the large resulting monolithic Jacobian systems with the Generalized Minimum Residual Method. The proposed method and the preconditioner are shown to be effective on two numerical examples of capillary flows, namely (i) the cylindrical die-swell problem, solved both in 3D Cartesian coordinates and under the Ansatz of axisymmetry; and (ii) an enclosed 2D thermo-capillary problem. For the die swell, numerical results are validated by existing experimental results and prior simulations, and confirm both the extension to 3D and theoretical convergence rates. For the thermo-capillary problem, simulations verify earlier calculations. Additional simulations are also carried out for a new range of contact angles made possible by the extension.