The D.C. Court of Appeals reversed yesterday the first-degree murder conviction of a Southeast Washington man because of what he called the "gross incompetence" of his attorney at trial.

The appeals court ruled that Paul Tillery, who had been found guilty of fatally shooting his girlfriend in 1976 in her U.S. Department of Transpertation office, had not been represented effectively by his lawyer, Grandison E. Hill.

Hill, 35, was one of the defense attorneys in the celebrated 1977 Hanafi Muslim murder-kidnapping trial.

At Tillery's trial, Hill argued that Tillery had been temporarily insane at the time of the Aug. 16, 1976, shooting of Brenda Jones of Oxon Hill.

A jury, however, convicted Tillery of a first-degree-murder charge and one charge of carrying a pistol without a license. He was sentenced to prison for 20 years to life and has been serving his sentence at Lorton Reformatory.

After his conviction, Tillery requested a new trial, partly on the basis that he had been ineffctively represented by Hill.

Tillery argued that Hill failed to properly brief his only expert witness, failed to obtain available medical information supporting the insanity defense, and failed to properly present his insanity defense during the trial.

The request for a new trial, however, was denied. D.C. Superior Court Judge H. Carl Moultrie I ruled that although Hill could have prepared the case more thoroughly, his performance had not been so incompetent as to ruin Tillery's defense.

However, in a ruling yesterday, the three-judge panel of the Appeals Court reversed Moultrie and sent the case back to the lower court for a new trial.

In an opinion written by Associate Judge Catherine B. Kelly, the court said Hill's "gross incompetence in the preparation, investigation, and presentation of [Tillery's] insanity defense . . . deprived him of his Sixth Admendment right to the effective assistance of counsel."

Court officials said the case would be referred -- as such cases routinely are -- to the local bar association disciplinary counsil for review.

Hill, reached last night, would not comment on the Court of Appeals ruling.