I know this is going to sound tough, but I would say you need to step down. Playing by the rules is very important, especially if you want to be a lawyer. Also, it shows good character and personal fitness. You need to disclose the problem, however, especially if there is a situation surrounding the low grades, perhaps the institution can work with you to overcome this problem. However, hiding it is not a good option.
I am not in law school yet, but I can't imagine people would look at low grades as embarrassing, seeing how hard the subject matter is. I would say disclose the information, and just hope that nothing bad comes of it. If they kick you out of the position, so be it and just keep swimming (I know, I know, but its tough not to quote Finding Nemo in a situation like this) and hope everything turns out for the best.
I am a big believer in everything happens for a reason, it may not seem great now, but who knows, see where it takes you. Perhaps with the honesty they will allow you to stay in the position.