"Everything is said to have its function and its virtue- which allows it to perform its function. The function of the soul is regulate life. And its peculiar virtue is justice. So the soul of the good man must live well; that of a bad man badly" (350-354c, Soc).

What he's saying here about function and virtue is that only if a thing is good it has virtue (or what he refers to as justice) and in order to have justice or virtue you must function.

An analogy might be helpful as well and Socrates makes this analogy in Book 1. He says that justice is to the soul what health is to the body, therefore if you have health your body will function well and if you have justice or virtue then your soul will function well also. Likewise, if you are unhealthy your body will not function well and if you are unjust then your soul will also be unjust.