On a human level, it's a difficult concept to understand that to offend at just one point of the law makes us guilty of all. How does this make sense? To some Christians, this should be taken to the extreme: A white lie is no better than cold blooded murder.
I am of the belief that this is a faulty interpretation. There are several passages that refer to greater and lesser sins. Most famously, in John 19:11, Jesus tells Pilate that "the one who delivered Me to you has the greater sin". (emphasis mine).
But if it doesn't mean that all sins are equal, what does it mean? In context, James is arguing against showing partiality. The people to whom James was writing had a nasty habit of treating people according to their wealth (v1-3), and so James rebukes them by showing that the poor are typically rich in faith (v5), and that the rich are typically oppressive (v6-7).
James then moves on to discuss the law, saying that it's all well and good to fulfil the part that says "You shall love your neighbor as yourself" (v8) but in showing partiality, they're still sinning and transgressing the law (v9). This is when he says that to fulfil the whole law and yet stumble in one point is to be guilty of all.
But he doesn't stop there, he continues to explain why this is: "For He who said, “Do not commit adultery,” also said, “Do not murder.” Now if you do not commit adultery, but you do murder, you have become a transgressor of the law." (v11). Thus, the reason offending in one point makes one guilty of all is that it's the same God who is ultimately offended.
After a visit to the National Marine Aquarium in Plymouth, as is my tradition after visiting any such place, I bought a mug from the gift shop. It was a beautiful mug, decorated with intricate images of turtles. Even the handle was a turtle. For a long time, it was my favourite mug. I had even determined that only two people should ever be allowed to drink from it: Myself, and, as a symbol of my love for her, my future wife. However, one day, the mug was a little too close to the sink, and my mother knocked it into the sink. Very little damage was done. The mug is still functional, and still in my possession to this day. However, there was still a chip in the mug, right at the very top. It is now very dangerous to drink from that side of the mug, lest it cut my lip. What was once a very sacred mug to me, I now consider broken, even though the majority of it is still intact, and I haven't taken a drink from it since.
Just as breaking only a small piece of my mug was enough for me to consider the mug "broken", so also is breaking only a small piece of the law enough to consider the law "transgressed". Sin is anything from a chip that cuts whoever drinks to a complete smash that makes it impossible to carry a drop of water.
And so James, far from trying to convince those who have stolen a pencil that they may as well have jammed it into someone's brain through their eye socket, has this to say: "So speak and so do as those who will be judged by the law of liberty. For judgment is without mercy to the one who has shown no mercy. Mercy triumphs over judgment." (v12-13).
In other words, we're all sinners. Every single one of us has transgressed the law, and so it doesn't matter how much money you have in this life, when you stand before God, you haven't got a penny to your name. You've sinned, and were it not for the cross, you wouldn't come out of God's courtroom alive. Only through Jesus can we be saved at all. But even with faith, we see that it is possible to suffer loss in the Kingdom (1 Corinthians 3:9-15). Thus there are two ways in which God can treat us if we mistreat others. He can save us "as through fire", meaning our reward in Heaven will be substantially less than it could have been, or He may even decide our faith is not genuine, and thus we will be condemned more than an unbeliever (Luke 12:47-48).
The takeaway from this verse, therefore, is not to be haughty. Treat others as you would have them treat you, and ensure you forgive others their sins, lest the Lord should refuse to forgive you.