A way to keep low losses from that attack is to keep your 3 tanks (paladins, knights, horsemen) close to one another with stone skin always on. The swords hits the 3 units that are the closest to one another, and those 3 should be it. Also, keeping your ranged and support units on the back line helps a lot.
You should also employ the tactic where 2 units stand one behind another. The Heavenly Guards should be perfect for that with their high physical resistance. Baal is most likely to hit 2 units that are one behind another than throw his sword or summon allies (according to the boss attack table - hit 2 units if possible has the highest chance, the next is throw a sword, and finally summon allies if you have 5-6 units - if you have more than 6, the chance for him to summon allies increases progressively). Keep using the Heavenly guards that way and things may change.
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