First of all, you've falied the subject already. No point of sleepless nights now.
Secondly, if you clear the paper eventually, it won't show up on your final marksheet. Now, what is final marksheet? The one you'd get at the end of your course.
People fail all the time. It's okay. I got a back in 4 subjects throughout my law school, and I did just fine in placements.
I've also seen people getting year backs and then flourishing in their careers later. You'll be fine.

If you're from a T1 NLU, then don't fret, one back won't matter. Yes, it does show up on your report card, but only as a small asterisk in a veeerry long document that most recruiters won't even see. Recruitments happen on the basis of your CV. As long as your CV is strong, the back won't matter, I can say this with complete confidence. Especially since you have more than 50% of your degree left.

What I will say is that study well in the future semesters, try to shore up your grades/rank - it is not the be-all-end-all marker, but it is the first thing any recruiter sees. And build your CV through strategic internships and extracurriculars. Good luck!

Relax buddy, your career is not done for. Believe me, I've been where you are right now. Back when I was in law school (non-NLU), I had to drop a year not once but twice because of my back papers. It was partly my fault because of my procrastination and laziness, but it was also because I have a hand issue which prevented me from completing any of my exam papers. I really regret not taking law school more seriously. After dropping a year the first time, I lost touch with most of my friends in college, and I felt lonely, ashamed and depressed. I cried. I even contemplated suicide at times. I felt guilty for having put my parents through that. I know what it's like to feel like a complete failure and feel like there's no hope. But trust me, it's not the end of the world. There's always a faint light at the end of the tunnel.

I eventually applied for extra time, managed to clear all my back papers and I graduated successfully. It was a long and hard road to get there, but I did it! For the first time in a long time, things were looking up for me. I felt like I had finally achieved something. I didn't sit for placements, but I applied for a job on my own and I got it because someone took a chance on me. Fast forward to today, I've been working for over 4 years. Sure, I've switched jobs, been in between jobs and I've experimented and tried different things in my career, but I think in a couple of years I'll finally be where I want to be. The point is that even after everything I went through in law school, I'm still here and I have a somewhat stable career. I'm very fortunate. And that's all that matters. A couple of years after you graduate, nobody is going to ask you what percentage you got in that one subject in your 3rd year of law school. Your work will speak for itself. And you will have plenty of opportunities to prove yourself.

I've made a lot of good and bad choices, and my failures far outweigh my successes. But without my failures, I would not be the person that I am today. And that's why I'll always be grateful for them. So don't let this one tiny failure bother you or discourage you. Use it as a source of strength. Surround yourself with people you love like your family and close friends, who will always be there for you and support you no matter what. Take the re-exam or re-assessment, whatever it takes, and pretty soon you'll be graduating with flying colours! And you'll get a job on your own steam.

So all the best, take care and do well! And please get back to me and let me know how it goes. Cheers!

Relax. It isn't the end of the world. This is a blip in what is going to be a long and interesting legal career.
I got a backpaper and life was fine. 10 years from there, it is what it is, a blip.
You need to just keep working hard and focus on cultivating contacts.
Many people with poor grades do well in law. This isn't a be all end all. Hard work pays off.