Why we need Law

James L. Ferrell explains why Law is necessary.

God, like my friend the judge, might wish that he could waive the law in the case of those whom he loves, but to do so would frustrate the whole plan of happiness. Why? Because to waive the consequences of law would be to render law meaningless. What’s wrong with that? one might respond, hopefully. If we got rid of law, wouldn’t we get rid of our problems? And wouldn’t that make life so much easier and more enjoyable? To which I would answer: “No, the law is a gift to us. Getting rid of it would mean that you and I would be doomed to an eternal hell.” 

Why is that? 

Think about it. Even if God could waive the law without frustrating the plan of happiness, that would solve only the first of our problems—the problem of needing to be justified or forgiven of our sins. Waiving the law would not sanctify our hearts, and we therefore would still be separated from God. It turns out that laws or commandments are necessary in order for us to become sanctified. Here’s why: We can overcome the desire for sinfulness only by being allowed to choose sinfulness. Where there is no choice to sin, there also can be no choice not to, and therefore no opportunity to overcome the desire for it. It was the establishment of the law that “created” the possibility of sin in the first place, for without the presence of the “right,” there would be nothing that could be considered “wrong.” “If . . . there is no law,” Lehi taught, “there is no sin. [And if] there is no sin, [then there can be] no righteousness.” (2 Nephi 2:13, See also Alma 42:13, 17–18)
("Falling to Heaven: The Surprising Path to Happiness", James L. Ferrell,  Chapter 8: The Big Picture, p. 52)

-