It's a Paragon/Renegade system. You lose a few Good Guy points for mayhem but the difference is negligible. They use the notifications for effect, mostly. It's like, -5 every time you hit a civilian with a car, for instance.
The Drug Raids are a great way to build them up. If I remember correctly they pay out in the thousands and they're actually quite addictive as well. You beat the crap out of some guys, do a minigame to hack a camera, then another minigame to send an arrest squad out from the surveillance set-up back at your apartment.