Daniel Manion is an Indiana attorney and a former state senator whose practice has been the usual small-firm mix of real estate transactions, business matters, wills and personal-injury claims. He has never argued a case before a federal appeals court or even been the lead lawyer in any federal case. That did not matter much to his clients or anyone else until President Reagan nominated the conservative lawyer for the important U.S. Seventh Circuit Court of Appeals, based in Chicago. Soon the Senate will vote on whether to confirm him, and the result is being watched intently. For Manion, 44, has become the unhappy symbol of a new turning in the Reagan drive to fill the federal bench with more ideologically congenial judges. By measure of all but the furthest-right yardsticks, Reagan's court appointments in his first four years were certainly conservative. At the same time, they were generally celebrated for their legal acuity at least as much as the nominations of any recent President. But during the President's second term, the American Bar Association has given eleven of his 28 appeals-court nominees a barely ''qualified'' rating, the lowest passing grade. ''That's like getting a D,'' says Nancy Broff, a lawyer with the liberal Alliance for / Justice. Only three of Jimmy Carter's 56 appeals-court nominees were rated that low. After watching glumly as the number of Reagan appointees climbed to a third of the 761 federal judgeships, opponents in Congress have started digging in their heels and building support. Two weeks ago, in the first such defeat for the Administration, the Senate Judiciary Committee voted 10 to 8 to reject the nomination of Jefferson Sessions, 39, the U.S. Attorney in Mobile picked for a federal district court judgeship in Alabama. Witnesses said that Sessions had called the N.A.A.C.P. and several other civil rights groups ''un-American,'' and once remarked that he had thought Ku Klux Klan members were ''O.K.'' until he found out they smoked pot. Sessions protests that he was ''caricatured'' unfairly by his opponents. ''It's rough on Capitol Hill right now,'' he says. ''Some good people are getting hurt.'' Anti-Reagan forces mean to get still rougher. And Manion is the next target. Last month a last-ditch Republican effort narrowly succeeded in getting his nomination released by the judiciary committee ''without a recommendation.'' The committee, however, is preparing a report on Manion's qualifications, a common practice only for Supreme Court nominees. Calling him ''deficient,'' the draft bemoans the spelling and grammatical errors in his legal briefs. It also faults his lack of experience in federal courts. (Among the cases Manion cited as his most significant were such unmomentous disputes as one in which he defended a car dealership accused of misrepairing a Volkswagen Rabbit.) Says Delaware Democratic Senator Joseph Biden: ''This man is not up to snuff. I think my milkman is a decent man, but he shouldn't serve on the circuit court of appeals.''
Manion supporters respond that the real reasons for opposition to his candidacy are political. ''He's a target of opportunity,'' says Patrick McGuigan of the right-leaning 721 Group. ''He's probably the most conservative of the pending crop'' of judicial nominations. In the Indiana senate, Manion co-sponsored legislation to permit public schools to post the Ten Commandments just two months after the Supreme Court had struck down a Kentucky law that required such posting. He sometimes appeared on a radio and TV show with his father Clarence, a former dean of the Notre Dame Law School and a leader of the extreme-right John Birch Society. The program gave him a chance to indicate, among other things, dissatisfaction with the long-accepted notion that major guarantees of the Bill of Rights apply to actions by state governments. Opponents contend this shows disregard for the Constitution. To supporters, such positions represent the possibility of getting a new constitutional interpretation. If Manion is defeated, there could be a domino effect. Waiting in the wings are several other controversial possibilities, including Lino Graglia, a University of Texas law professor who has twice been rejected by the A.B.A. ''The White House has to decide if it wants the curtain to come down on the Reagan judiciary in the second term,'' says McGuigan, urging the Administration to push harder against the increased Senate resistance. One member of that resistance, Illinois Democrat Paul Simon, also sees the Manion battle as critical. ''Those appointed to the federal bench for life,'' he says, ''should be the best the legal profession has to offer. Too many clearly are not.'' While the Senate prepared to consider Manion last week, the House was pondering the arduous prospect of a judicial impeachment. Convicted two years ago of income tax evasion, Nevada Federal District Judge Harry Claiborne began serving a two-year sentence last month at Maxwell Air Force Base in Alabama. The first sitting federal judge to be imprisoned, Claiborne, a Carter appointee, has refused to resign, continues to draw his $78,700 annual salary and could return to the bench as early as next year. New Jersey Democrat Peter Rodino, Judiciary Committee chairman, has introduced an impeachment resolution, which a subcommittee is now considering. The Constitution makes it difficult to remove any judge. If a House majority votes to impeach, action would move to the Senate, where Claiborne would become the focus of the nation's first impeachment trial in 50 years.