When initiating combat against a Templar, press LB to lock on to him. Then, quickly equip the hidden blade. Wait for him to attack you so that you can counter attack, killing him in one blow. This is better than the sword fight. When sword fighting if you counter, you will only knock him down and not kill the Templar.

The easiest way to kill a Templar is to counter. When they get knocked down, switch to the hidden blade and stab them.