Clear-headed Law Lord covering a group of islands (5)
I believe the answer is:
lucid
'clear-headed' is the definition.
'law lord covering a group of islands' is the wordplay.
'law lord' becomes 'lud' (I've seen this in other clues).
'covering' is an insertion indicator.
'a group of islands' becomes 'ci' (abbreviation for Channel Islands).
'lud' going around 'ci' is 'LUCID'.
(Other definitions for lucid that I've seen before include "Limpid" , "Compos mentis" , "Clear, easily understandable" , "Bright; sane" , "between raves?" .)