Fallen way behind who?
Other than Leatherman there are only two manufacturers of high-end, full-line multi-tools. Gerber and SOG, Leatherman always has been and is still a better product in all dimensions than Gerber and compares favorably to SOG but may loose some points in rust resistance and overall strength compared to some of SOGs tools.
Victorinox is generally decided as being superior to Leatherman in overall fit and finish but looses a few steps in function due to some of the "soft-boiled" implements. Victorinox also only manufactures two different models with a few varieties of each.
The base argument showing Leatherman's "drop in quality" is the loss of rust resistance on some of their models due to finish changes that occured in 2004. Leatherman switched from a medium polish to a light polish in the interest of improved grip, this lead to slightly less rust resistance and the current trend of feeling a loss of quality. Compare the quality of implements of older Leatherman tools to modern versions and there is a noticeable improvement in fit and finish, ergonomics and overall utility.