Jay Adam’s book on forgiveness has been a wonderful practical resource in my library. It begins by describing the forgiveness we as sinners have received from God, and then describes the forgiveness we might expect (and practice) among believers.
A forgiving community is made up of forgiven people who have not forgotten that fact. In pharisaical and legalistic communities, people have forgotten that it is only by the grace of God they are what they are. Or they find it possible to pretend they are better than they really are by conforming outwardly to biblical standards. Unless they are jogged from time to time by powerful and precise preaching, such communities gradually acquire the notion that they did not need forgiving all that much when they were saved—just minimally! But congregations at their best are composed of grateful people who do remember the pit from which they were rescued (Isa. 51:1). They act neither shocked by sin in others nor superior to those in whom sin is found.
Jay Edward Adams, From Forgiven to Forgiving (Wheaton, IL: Victor Books, 1989), 112.