Have you talked to your law school's career office? I think you can add an addendum to your transcript explaining the circumstances. Your school might be able to provide it. That way you won't need to discuss it in your cover letter and hopefully nobody will ask you about it in an interview (since it's a sensitive topic). You should definitely apply for all the jobs that you're interested in. Your grades in 2L show significant improvement. Students apply for jobs with worse grades all the time.
It should be noted that the LSAT is a standardized aptitude assessment test, not a multiple choice exam for an undergraduate course designed to assess your information retention and recall abilities alone. While certain broad strategies you may have learned during your undergraduate to facilitate multiple choice exam taking may be cross applicable to the LSAT (for example, disqualifying incorrect answer choices first before comparing two or three likely correct answer choices), not all will be.
As someone who also completed a degree in criminology before applying to and receiving an offer of admission to Osgoode amongst other schools, I can promise you absolutely no class material you may have covered and internalized will be relevant to the LSAT; the LSAT assesses test takers' analytical and logical reasoning abilities, as well as their level of reading comprehension. This means that you must develop an understanding of how the LSAT assesses analytical and logical reasoning abilities, as well as reading comprehension level to do well on the test; any substantive knowledge you may have about the topics or subjects covered within LSAT questions across each section of the test will not help you.
2 months; in my personal opinion; is not enough time to sufficiently study for the LSAT, except for persons who- following multiple diagnostics- can consistently attain scores in the mid 160's to low 170's. Take a diagnostic LSAT (under timed conditions which mirror those on test day) to determine what level of understanding of the test you are starting from.
Hm, to work 40-50 hours per week it means to work 8-9 hours per day (except weekends). Think that it is pretty easy, the majority of world work with such schedule. However, it is very important that these house would be profitable. As a boss, for me it is very important aspect. I always try to improve our profit and to do work in our company more pleasant. It helps me to review schedules and communication in our team, but is very important for every community, even for employees.
What are your goals? What type of job do you want?
If you are applying with transcripts the initial option is really just whether or not to touch on the circumstances in your covering letter. If your 2L and 3L grades are all Bs and As, your transcript will kind of speak for itself and prove that your 1L grades did not reflect your capabilities. If you do address it in a covering letter I would suggest doing so only briefly - give it one sentence offering that your first year grades are not reflective of your capabilities and were the result of unfortunate external events.
It will probably come up in every interview though. It sounds like you have a very valid explanation. You have no need to be embarrassed.