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I have been in both the boats (different times).
I was a failure kid in school, used to fail terribly in math. But after getting into NLU for my LLM, I had to work really hard to get good grades. Since my rank was not that great we were given roll numbers in our PG on the basis of our CLAT PG rank ( I lied in the mid 20s) but from day one, I respected the teachers, maintained their regard, whereas many students in the class would mess with the teachers or would start up frivolous debates on controversial topics, I on the other hand and few other students spoke on the legal grounds without disrespecting or demeaning others, this created a positive impact in creating the mindset of the teachers that I am a good student. Apart from being in good books also had to maintain it on paper, so I worked really hard for the exams and got a rank in the top 3 from my batch in our sem-end exams.
So yea,
It matters a lot, but it is purely subjective and varies from the demands of the career path you want to choose, like I want to get into academia so this trajectory was important to me while in law school, as it helps in recognition.
Getting good grades in the first year, will most definitely determine your value in future years.