A JUDGE said today he found it "deeply troubling" that a law firm can avoid paying $675,000 to a mentally incapacitated client that it negligently advised because of an ancient law that protects lawyers from being sued.

Justice Kevin Bell found that Goddard Elliott was negligent in preparing the case of client Paul Fritsch and as a result he only received less than a third of his share of a marital pool of $4.3 million.

In his Supreme Court judgment, Justice Bell said Mr Fritsch was entitled to substantial compensation from the Glen Waverley law firm but the Common Law "advocates' immunity" shielded the firm for paying for their negligent handling of his case.

"Goddard Elliott is not liable to pay damages for the loss its negligence caused to Mr Fritsch, a conclusion to which I am driven and find deeply troubling," Justice Bell said.

The judge said previous High Court decisions were a binding authority and meant advocates' immunity was a complete defence to Mr Fritsch's lawsuit.

And to rub salt into Mr Fritsch's wounds Justice Bell ordered the former Vietnam veteran to pay $68,000 in legal costs to Goddard Elliott plus interest.

Australia is the last country in the world to retain advocates’ immunity, a doctrine that shields barristers and solicitors from being sued if their negligence is "intimately connected to litigation".

Canada abolished advocates' immunity in 1861 and England in 2000.

Justice Bell said Mr Fritsch is a 64-year-old invalid pensioner with a mental illness.

Mr Fritsch's solicitor was Andrew Goddard of Goddard and Elliott and the judge said that because of his failures a property settlement was reached which was "very generous in favour of the wife".

Justice Bell found that Goddard Elliott failed to prepare the case properly in three important respects and took instructions from Mr Fritsch to settle the case "when he did not have the mental capacity to give those instructions".

"The circumstances of the preparation negligence were that the business valuation, taxation, costs and post-separation expenditure by the husband were important issues," the judge said.

"Mr Fritsch was a Vietnam veteran who was known to be suffering from major depression and post traumatic stress disorder.

"He was not in a fit mental state to be giving instructions, which his lawyers should have known."

Justice Bell said Mr Fritsch received $1.3 million when he should have received $2.3 million and with "appropriate subtractions" his lost opportunity was $900,000.

The judge said Mr Fritsch also sued two barristers and an accountant and settled his claims against all three.