Straight after defeating the Flugel gate keeper you'll be returned to Kirito's room, where the gang will ask you to become squad leader. There's a quick battle to undertake in which you'll have to beat four of your friends. This was very straightforward for me. They don't appear to revive one another and do very little damage, so I focussed on one target at a time. It took less than 2 minutes. Once the fight is over you are the squad leader.