The Synthetic Fuels Corp. has had some hard times gearing up for business since it was created last year -- which has meant very good business for some local law firms.

The corporation was set up to spur the growth of synthetic fuels as a substitute for imported oil by giving out $18 billion in loan guarantees and price supports to the private sector to develop alternate fuels.

Last fall's election, however, put the new operation in limbo. The originial board of directors appointed by President Carter resigned last January.President Reagan, who has criticized the program during the campaign, questioning the need for the costly project, took his time nominating a new board. Only five of the seven members have been nominated and none has been confirmed.

In the meantime, the corporation limped along under acting chairman John J. McAtee Jr. with less than a third of the 300 staff members that were budgeted and only five lawyers in the general counsel's office.

So McAtee called on outside lawyers to serve, in effect, as the general counsel's office staff.

McAtee doled out more than $220,000 in business in the first three months of this year -- $180,000 to Arnold & Porter alone for general legal services. o

Three other firms -- Caplin & Drysdale; Wilmer, Cutler & Pickering and Steptoe & Johnson -- shared about $40,000 in billings for specific tasks. Caplin & Drysdale worked on the corporation's obligations under the Freedom of Information Act; Steptoe & Johnson worked on labor issues; Wilmer, Cutler looked into antitrust matters.

The House Environment, Energy and Natural Resources subcommittee, which oversees the agency, held one day of hearings last February to look into what the boardless corporation was doing and to ask it about its extensive use of outside lawyers at rates of up to $175 an hour. That's easily four or five times what an in-house attorney would make.

Why was Arnold & Porter selected under what the committee called an "open-ended contract?"

"They are good, convenient and an elevator ride away," corporation spokesman Bill Rhatican said in an interview last week. "We could consult with them without going out in the rain." Until July 1, the corporation is renting space in the Thurman Arnold Building. But it pays rent to the onwer not to the firm.

According to the committee report, there was virtually no competitive bidding for the work. Highly regarded -- and high priced -- firms apparently were picked simply on their reputations, although Owen Malone, one of the corporation's not-so-expensive in-house lawyers, suggested that "the work be spread around."

Arnold & Porter even helped the corporation prepare its testimony before the subcommittee -- for which it was paid $10,022.63. McAtee told the subcommittee that his actions, including any use of outside counsel, wre perfectly legal. After all, many of the corporation's decisions, he said, had been blessed by highly regarded outside counsel.

Corporation sources say the use of outside counsel was essential given the crushing amount of work, the fact that there were only five corporation attorneys hired -- and only one with government experience -- and that without a board, it was not clear that any more could be hired.

But as the subcommittee's resulting report pointed out, there are problems when a government body uses outside counsel, even when the outside experts do, as these firms did, exactly what they are hired to do and do it well.

One problem is addiction: The more outsiders are used, the less in-house expertise is developed, leading to more and more independence on the outsider experts.

Another problem is accountablility: Outside lawyers are accountable only to their clients, not to the public.

At least theoretically, an in-house counsel, a federal employe, might -- just might -- feel a bit more obliged to take into account the public interest when giving advice.

A Maryland woman, convicted of murder in Prince George's County Circuit Court, had her conviction overturned last week because of mental incompetence -- not her's, but her lawyer's.

The Maryland Court of Special Appeals ruled that Dorothy Mae Green's lawyer was mentally unbalanced at the time of her trial.

The appeals court said Green, who was convicted of murdering a woman in December 1979 in the apartment of Green's former boyfriend, should get a new trial.

The three-judge panel opinion said that her lawyer was committed to a mental hosptial at the request of his wife four days after the trial, according to an Associated Press account of the ruling.

Green's new lawyer also argued that the conviction should be overturned because of insufficent evidence against her, but the panel dismissed that contention.