My little 3 lb spayed girl had LP 4 surgery. She had to have a tibial transposition (hope I am spelling that right) as he tried to deepen the groove and it popped back out before he could even secure it. So he had to basically "reform" the knee and use wires to fuse it in place. She would not walk on the knee at all...she held it up and ran/walked with 3 legs. I had the surgery done when she was only 9 months old because of the severity of it and because I was told that it's better to have it fixed when the dog is younger and the bones are more pliable and not "set" fully. She was out of commission for about 6 weeks, went through rehab and therapy, and within 3 months was completely using the leg and walking normally. Now over a year later she is doing wonderful and shows no signs that anything was ever done. She is one of my fastest babies!
The prognosis is very good if it is fixed early, and done with a surgeon who knows what they're doing. Your baby is still very young and this is a great time to have it done. I know there are some natural approaches that don't involve surgery that some people have been successful using, but the best chance of living a pain-free life is to have the surgery done, if they are a good candidate.