Lawyers padding their bills are violating disciplinary rules and courting criminal prosecution. Clients who've been victims of gouging also are winning malpractice suits and colleagues who fail to properly review the firm's accounts may be liable as well.
The ethical rules are straightforward. Model Rule of Professional Conduct 1.5 requires that a lawyer's fee be reasonable and that a lawyer clearly communicate to a client at the beginning of the representation the basis on which the client will be charged.
A related question is whether a lawyer who uses computerized research may bill the client for the time it would have taken if he or she had performed manual research in the library.
Honesty in billing also requires that costs and fees be properly distinguished on statements of charges. Fees are strictly limited to time spent by lawyers. If a paralegal performs research, the time is chargable as a cost. Billing for law clerk or paralegal services as lawyer time is a fraudulent misrepresentation to the client that legal services have been rendered by a lawyer.
A fair profit is not incompatible with truthful and complete billing statements.