My fist is essentially closed when I play, but not balled up to where my knuckles drag, so I know what you're talking about. I would adjust the position of the pick, first by placing your thumb a little bit lower on your index finger, (where they connect to hold the pick) that way the pick sticks down a little lower than your knuckles, and at the same time you don't have to change how much of the pick is exposed out of your fingers.. You just gotta keep moving it tiny bits at a time, and once you find a place where you achieve your result, just stick with it.