Five years ago, when Judge W. Byron Sorrell applied for a second 15-year term on D.C. Superior Court, the city's Judicial Tenure and Disabilities Commission rated him "qualified," the lowest favorable rating the commission can give.

The commission's findings, which faulted Sorrell for "poor judgment" and "lack of understanding" on the bench, would have required that Sorrell be renominated by the president and go before the Senate for hearings on his fitness for a second term. Sorrell retired instead, but he has been hearing court cases ever since with the approval of the court's chief judge, without any further review by the judicial commission.

"The chief judge asked me to sit and I've been sitting ever since then, apparently to his satisfaction," Sorrell said yesterday. "And I say that because he's mentioned it often."

The case of Judge Sorrell, 64, is frequently cited by lawyers as one reason for recently approved legislation that is believed to be the first of its kind in the nation.

The measure, signed into law last week by President Reagan, requires that any D.C. judge who wishes to continue hearing cases after retirement first receive approval from the judicial commission. The judge's fitness must also be reviewed every two years.

Authorities said the new law could force some retired judges to discontinue their service while other judges approaching retirement may decide not to return to the court.

"I think every judge over 70, and any senior judge who's been in senior status more than five or 10 years, really warrants close scrutiny," said Samuel F. Harahan, director of the Council on Court Excellence, a watchdog group that pressed for a more lenient version of the measure.

"I don't think we're going to have any wholesale findings that the retired judges aren't qualified," Harahan said. "What you may find is a couple of judges stepping down."

Lawyers and some judges had criticized the old system because it allowed retired judges to continue sitting in court indefinitely with no outside review and regardless of any disciplinary action the tenure and disabilities commission may have been taken against them.

The commission is composed of lawyers, lay people and one judge from the federal bench and investigates complaints about local judges and evaluates their performance when judges seek new terms.

"There have been instances in the past in which judges elected to retire rather than go through the evaluation process," said lawyer William W. Taylor III, who recently retired as chairman of the commission.

"Until the passage of this statute, judges who decided to do that never came under evaluation by anybody."

The new law sets D.C. apart from Maryland and Virginia, where retired judges can be called back into service only for 90-day terms, without any outside review of their fitness.

Some D.C. judges now hearing cases have been sitting on the bench under retired status for years, even longer than they did as active judges. Judge George D. Neilson, for instance, retired in 1960 but the 78-year-old judge continues to preside over some domestic disputes.

He was first commissioned as a judge in 1940 by President Roosevelt.

Lawyers contend that some older retired judges no longer know the law as well as they should.

"There comes a time in the life of any human being when his or her capacity diminishes to the point that they should no longer sit," said Judge Theodore R. Newman Jr., who recently stepped down as chief judge of the D.C. Court of Appeals.

Until now, authority to designate retired judges for continued service on the appeals bench and on D.C. Superior Court, the lower trial court, rested solely with the chief judges of those courts.

Because of mounting backlogs of cases, Superior Court Chief Judge H. Carl Moultrie I took the unprecedented step last year of appointing 10 retired judges to preside regularly over cases, seven of them full time.

The appeals court agreed for the first time last year to allow retired judges to sit on panels that interpret city law in published opinions.

Congress recently raised the mandatory retirement age for city judges from 70 to 74.

Authorities said backlog pressures create a conflict for the chief judges in designating retired judges for continued duty.

"You're working with a very delicate area," Harahan said. "What we're simply trying to provide is for the system to have a check on itself other than the kind of conflict-of-interest situation the chief judge is in."

Moultrie declined to comment last week, but he wrote a year ago that "each of these retired judges is highly competent and capable or I would not have asked him to serve . . . . They serve loyally, industriously, faithfully and, thank God, fruitfully."

The law has gotten mixed reactions from retired judges.

"The chief knows who's competent and who's capable. He knows the kind of job they can do," said Judge Samuel B. Block, who stepped down after reaching 70 two years ago, but continues to hear cases regularly. "I plan to keep on going and I don't anticipate any problems . . . . I think we do a darn good job and the court, God knows, needs us."

Block said the review process "can be a little embarrassing, a little bit humiliating."

Another retired judge who continues to sit, William S. Thompson, said he welcomes the legislation. "I work just about as much now as I did before I retired," Thompson said. "I think a person should keep active as long as he can and I enjoy the work I do."