Having established the basis of God’s pleasure in us, viz., the imputation of righteousness (or forensic justification), Paul now discusses the impartation of righteousness, or sanctification (5:12–8:39). This is the third major section of the epistle. In some ways there is a neat trilogy found in these first eight chapters. The apostle first discusses justification which is salvation from the penalty of sin (3:21–5:11). Then he deals with sanctification or salvation from the power of sin (5:12–8:17). Finally, he addresses glorification which is salvation from the presence of sin (8:18-39).12
Paul lays out his views on sanctification using the twin themes of reigning and slavery. He begins by contrasting the reign of grace with the reign of sin (5:12-21). Although many NT students would place 5:12-21 under the second major section (i.e., under “Justification”), “the words ‘just,’ ‘justice’ and ‘faith’ coming from the first part of the quotation (Hab 2:4 in Rom 1:17) as given by Paul, are of very frequent occurrence from 1:17 to 5:11, and almost entirely absent thereafter. On the other hand, the terms signifying ‘life’ (and ‘death’) occur regularly in chapters 5:12 to 7:1.”13 Thus the apostle seems to be signaling that he is now picking up a new topic.
In 5:12-21 Paul moves beyond the legal issue of justification. What is essential to get here is that imputed righteousness addresses the condemnation of the law while imparted righteousness addresses the inability of the flesh. That is to say, justification is forensic, stating emphatically that our position before God is one of righteousness. But justification, like the Law, can do nothing against the flesh. That is why Paul now turns to imparted righteousness and gives the basis as our union with Christ. Our union with Christ is more than forensic; it is organic.14 As Adam was our representative in sin, bringing death to all (5:12), so also Christ is our representative in righteousness, bringing life to all (5:18).15
Why is this significant? I believe this is highly significant for the very reason Wallace comments upon: many NT students consider Romans 5:12-21 to be speaking of justification, not sanctification. The classical Protestant position has been adamant that justification and sanctification are separate and distinct 'phases' in a Christians salvation, never to be confused or mixed. Yet the fact is, Protestants cannot agree on whether Romans 5:12-21 is speaking on justification or sanctification. And while Wallace says "many NT students" make that mistake, a far truer description is "most Protestant scholars and apologists" (e.g. James White, John Piper) are making that mistake! So, the problem is simple: do we trust the majority 'tradition' of Protestants who say Romans 5:12-21 is about justification, or do we trust one of the leading Greek scholars (who's book is a standard for teaching Greek to seminarians)? And it's not like Wallace is not backing up his claims, he is, and Catholics would largely agree with his reasoning.
Why do most Protestant scholars and apologists believe Romans 5:12ff is about justification? Because it is a alleged cardinal proof-text for Christ's Active Obedience imputed to the believer at the moment of justification. Further, there is some language in that section that sounds very much like "justification," so they necessarily make that conclusion.
From the Catholic view, both of the above parties are half right, and that is because the text is speaking of both "justification" and "sanctification," and that's because there is no sharp distinction between the two as Protestants claim. Justification is not purely forensic, as classical Justification by Faith Alone teaches, and instead it includes an inner transformation, which is sanctification.