Take a look at Romans 7. Paul is describing this conflict between the old and new man. While he is legally righteous (justified) he is not inherently righteous. He still sins. Sure, he is growing in the faith and becoming more like Christ, but he still deals with the old man. Yet, even at this point in his growth he is still legally righteous because of Christ even though he is not completely righteous (sinless).

This was the great debate between Luther and the Roman church. Luther taught "simul iustus et peccator" which means that we are both justified (declared righteous) and sinner. Rome refused to accept that God would declare a person righteous when they were in fact not. Therefore, Rome includes sanctification as a component of justification instead of seperating the two as the Reformers did. This idea of being declared righteous and then growing in righteousness versus becoming righteous first and then being declared justified is the entire hinge upon which the Reformation hung.

declared righteous = justification
becoming righteous = sanctification

Hope this helps...

One more thing - we cannot earn justification it is totally of grace. No Lordship person would ever claim that a person can earn justification. Their issue has to do with result of justification. The result is that a person will begin down the path of sanctification. If they do not begin down the path then they were never justified in the first place...

Remember Jesus said we will know people by their fruit. The fruit does not make a person saved or unsaved, it just reveals their condition. Bad fruit cannot come from a good tree and good fruit cannot come from a bad tree...