Hatua hii inahusu kipindi kilichoanzia mwaka 950 CE hadi kuteketezwa kwa Baghdad (1259 CE), na inaonyesha kudhoofika kwa nasaba ya ‘Abbaasid hadi kuanguka kwake hatimaye. Mijadala ya ushindani iitwayo MunaadHaraat iliendelea kustawi chini ya udhamini wa makhalifa wa ‘Abbaasid, na baadhi ya mijadala hii ilirekodiwa kwenye vitabu. Baada ya muda, roho ya ushindani iliyozalishwa kwa kiasi kikubwa na mijadala hii ilienea hadi kwa watu wa kawaida, na upendeleo wa madhehebu (Madh-hab) ukaenea sana. Idadi ya madhehebu ilipungua kwa kiasi kikubwa, na muundo na uendeshaji wa manne yaliyonusurika ukawa wa mfumo wa hali ya juu. Wanachuoni ndani ya madhehebu moja walilazimika kuegemeza Ijtihaad zao kwa misingi ya msingi (Usool) ya madhehebu yao mahususi pekee. Katika kipindi hiki, ukusanyaji wa Fiqh uliendelezwa zaidi na kurasimishwa, na ukatumiwa kuchochea ushindani wa madhehebu.

This stage covers the period between the year 950 CE and the sacking of Baghdad (1259 CE) and represents the decline of the ‘Abbaasid dynasty until its eventual collapse. Competitive debates called MunaadHaraat continued to flourish under the patronage of the ‘Abbaasid caliphs and some of these debates were actually recorded in books. In time, the spirit of rivalry largely generated by these debates spread to the masses, and Madh-hab factionalism became widespread. There was a drastic reduction in the number of Madh-habs, and the structure and operatin of the four that survived became highly systematized. Scholars within a Madh-hab were obliged to base their Ijtihaads solely on the fundamental principles (Usool) of their particular Madh-hab. During this period the compilation of Fiqh was further fomalized and used to further Madhhab rivalry.

Katika kipindi hiki, idadi ya madhehebu kuu za fiqhi (mikondo ya sheria za Kiislamu) ilipungua hadi manne; matatu makuu na moja dogo. Kwa maneno mengine, madhehebu ya maimamu wakubwa kama al-Awzaa'ee, Sufyaan ath-Thawree, Ibn Abee Laylaa, Abu Thawr na al-Layth ibn Sa'd yalikuwa yametoweka, na kubaki madhehebu ya Abu Haneefah, Maalik, ash-Shaafi'ee na Ahmad ibn Hambal pekee. Baada ya muda, shule hizi za mawazo ya kisheria zilienea kiasi cha kwamba watu wa kawaida walisahau kabisa kwamba shule nyingine zilikuwepo. Kila moja ya shule hizi ilipata nguvu na mwendo wake wenyewe, na wafuasi wake wakaanza mazoea ya kujiita kwa majina ya madhehebu yao. Kwa mfano, al-Husayn ibn Mas'oud al-Baghawee, mwandishi wa kitabu cha fiqhi kinachojulikana sana, Sharh as-Sunnah, alijulikana kuwa Shaafi'ee kwa kufuata madhehebu ya Shaafi'ee.

During this stage, the number of major Madh-habs (schools of Islamic law) dwindled to four; three major and one minor. In order words , the Madh-habs of great Imaams like al-Awzaa’ee, Sufyaan ath-Thawree, Ibn Abee Laylaa, Abu Thawr and al-Layth ibn Sa’d had all disappeared leaving only the Madh-habs of Abu Haneefah, Maalik, ash-Shaafi’ee and Ahmad ibn Hambal. In time, these schools of Islamic legal thought became so predominant that the common people soon forgot that any other schools, even existed. Each of these schools soon took on a dynamism of its own and their followers started the practice of naming themselves after their respective Madh-habs. For example, al-Husayn ibn Mas’oud alBaghawee, author of the Fiqh classic, Sharh as-Sunnah, was Shaafi’ee after the Shaafi’ee Madh-hab.

Katika hatua hii, wanazuoni wa kila Madh-hab walichambua hukumu zote za wanazuoni waanzilishi wa madh-hab zao, wakabainisha misingi ya msingi iliyosimama nyuma ya hukumu zao, na kuyapanga kuwa kanuni zilizoandikwa. Pia walifanya Ijtihadi chache juu ya masuala ambayo waanzilishi hawakuwahi kukutana nayo. Hata hivyo, eneo hili halikuchukua muda mrefu kuisha kutokana na matumizi makubwa ya Fiqhi ya kudhania-dhania (ya kinadharia), ndani na nje ya mijadala ya mahakamani.

During this stage the scholars of each Madh-hab analysed all the rulings of their Madh-habs’ founding scholars, deduced the fundamental principles behind their rulings and codified them. They also made limited Ijtihaads on issues which the founders had not come across. However, this area soon became exhausted due to the widespread use of hypothetical Fiqh, in and outside of court debates.

Hatimaye, ijtihadi huru ilitupwa na badala yake ikachukuliwa ijtihadi inayotegemea kanuni zilizothibitishwa za madhehebu fulani.

Ultimately independent Ijtihaad was discarded in favor of Ijtihaad based upon the established principles of a particular Madh-hab.