It is perfectly ethical for the lawfirm to drag out the case if they believe they will get substantially more for their clients. Part of the job is to maximize the money for your clients, even if it takes some time; attorneys have a fiduciary duty to their clients. Howard even pointed out that their projection was that Sandpiper would eventually settle for a lot more (which I'm presuming was based on Chuck's original season 1 analysis of RICO laws being applicable, allowing for triple damages if they won at trial.)
However, while it is not unethical to drag out a case to maximize settlement money for the class members, Jimmy's argument for settlement was not wrong (despite his entirely selfish reasons) when he confronted Howard.