Leadership increases in one of three ways:
1) picking up banners/flags you see on the adventure map
2) progressing the main quests; it doesn't increase at the completion of every main quest, but at specific main quests (after Lyaro Island, comleting the Treaty with the Dwarves, etc.)
3) by choosing Leadership bonuses at level up; Leadership bonuses could show up as one of the two options to increase during leveling up; if you don't choose Leadership as the bonus you want when you level up, then you won't get any leadership points at all when advancing in level
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