OK, cool. First thing I’d suggest is that you remove the brake from the bike, and just try squeezing the lever- what you’re watching for here is fluid coming out the back of the lever body (ie, where the handlebar would usually be).
These brakes are pretty straightforward to bleed, but the reservoir is fairly small so if air is left in (when bleeding) or gets in (via a leak in the diaphragm at the back) then it’s likely to get into the working fluid and cause your symptoms. They revised the diaphragm slightly in later models to make it more durable which always suggests to me that the original design wasn’t quite right.
Equally it could be that the main pressure piston is damaged or worn but that’d usually be more consistent.