This is a variation on Trollsmyth's house rule. Here.
Any time a character takes damage, he may opt to sacrifice his shield (if he is equipped with one), declaring it "splintered." This renders the shield useless, but has the effect of completely negating the blow that would otherwise have damaged the combatant in question. This only works for melee attacks, and cannot be used in regards to missiles or thrown weapons.
Against damaging magical spells (even breath weapons) that are clearly targeted and that cause effects which could be blocked, this rule can be invoked in the following way: the player can declare that his character absorbs most of the effect with his shield, and gains a saving throw (if one was not allowed originally by the spell or magical effect) for half damage. If there was originally a saving throw allowed, the invoking of this rule means an automatic success on the saving throw - but the shield is rendered useless in any case.