How much of a role is grades going to play when someone applies to a law firm for an internship? My question is related to applications made through RCCs and directly to law firms.
This is in context to the present covid situation where some law schools have a relatively relaxed grading structure whereas other law schools are still grading with strict criterias.

Depends on your year of study. Grades are important throughout law school, but their importance for getting law firm internships decreases as you progress through the years. Initially, grades will almost be the sole criteria for getting internships as you won't have much of anything else on your CV. Later on, you might see people holding poor ranks but with tier 1 law firm internships on their CV being preferred over students with better ranks but less internship experience. At least this has been my experience so far. In my batch, I regularly see students with ranks in the 60s getting shortlisted over students in the top 20 ranks if the former have better internships on their CV.

Hey, I am the person who wrote this comment. I just wanted to say that you shouldn't interpret my comment to mean that grades aren't important at all. As I said, they are still very important throughout law school. I just don't want you or anyone else to read my comment and decide not to study properly at law school!

The grading at our university is now entirely random and senseless so I hope not, but I doubt law firms will think about it so much and analyse every law school's exam model, so unfortunately I think it will still matter. People artificially inflated their marks a LOT and get the same scores as the top four or five who were otherwise generally far better. Open books with theory questions with people just copying upto 10k words.. absolutely insane stuff. Not saying this as a fan of academic rigor over empathy but if the marks will matter so much some attempt should have been made to make tests reflect understanding, or status quo could have been preserved. No vivas either. So 2 years of law school were just people randomly copying internet sources and teaching material they were sent. Marks for formatting.

"Relaxed grading"? What relaxed grading?

For 2 semesters now (since July 2020), NALSAR has had intensive weekly tests for all its mandatory subjects equivalent to a 25% (mid semester) weightage. 90 minute exams - no time to sit and go through the notes/class materials at length (contrast with 72 hour exams being followed by many universities). The papers are submitted to Turnitin (plagiarism checker). Professors openly say that they identify students who've simply paraphrased answers to fraud turnitin and deduct marks proportionately. Sure, maybe a few professors have slightly relaxed grading standards but that's surely not the norm. It's like regular college - some mark leniently, some strictly. While some students might try and write exams without much preparation - depending on help from batchmates, they rarely tend to score anything beyond a just-pass grade.

And its not like we have been allowed to simply submit research papers for 50% weightage (like other colleges) and get away without giving exams (only the March 2020 semester, when everyone was adapting to the online system). The system has become more engaging, if anything.

NALSAR students have been facing a very high degree of academic rigour with continuously being engaged and preparing for exams week in and week out since the past one year (except for the semester break). The reason grades are higher is simply because weekly exams ensure continuous engagement with the course material, something absent in the normal midsem-endsem format (wherein course material would only be touched a week prior to the papers). And also that note taking is much easier and more comprehensive in the online format with availability of recorded lectures. If students require individual accommodations due to the circumstances they are in, they can give the repeat cycle, but no one's getting away without giving exams.

So the reason for better grades on average is not leniency in grading, it is the way the system is modelled, and generally students working hard because they want jobs and the pandemic market is scary. When you say relaxed grading, and stricter criterias - don't make generalizations for the entire universities (it is more dependent on professors).