Wet leather shrinks because water bonds with and displaces its lubricating oils, leaving its components (fibers and protein) exposed to the air as it dries. Rescue wet leather by cleaning it and applying a pH-balanced conditioner while it's still wet in order to recondition the leather as it dries.
Leather is made up of intertwined fibers that are held together by protein. The tanning process uses chemicals to bond the collagen to the protein, and the leather is then tumbled with fats and oils to protect the bond. Damp wipe leather furniture to clean it, and apply a leather conditioner every three months to keep it supple.