Odd aggressive behavior

Question
I have two 14 month old Lhasa mixes (sisters and foster dogs).  Usually, they get along very well.  They play roughly with each other but usually don't fight. They get along with the other dogs in the house.  Here is my concern, when I walk them on the lead, and another dog passes by, one will bark at the passing dog and then the other will start a fight with her sister. Any suggestions?

Answer
Redirected aggression occurs when a dog that is aggressively motivated redirects the aggression from the source to another. For example, a dog that is barking at the door may redirect his aggression onto an owner that is pulling him back. Dominant dogs often redirect onto subordinates.

Treatment

Treating aggressive behavior may involve a combination of behavior modification techniques (habituation, counterconditioning and desensitization), drug therapy, surgery (such as neutering/spaying), avoidance and management (such as leash or head halter). Each case is unique, and the success of treatment varies depending on the diagnosis and in accord with your capability, motivation and schedule.

Even with successful treatment, however, there is no guarantee that the aggressive behavior won't return. In most cases, the frequency and severity of aggressive behavior can be reduced but the aggressive behavior cannot be eliminated completely. The best that may be hoped for is to reduce the probability of aggression. You must weigh the risks of keeping an aggressive dog against the benefits.

Another source of additional information:

http://www.ehow.com/about_5401960_redirected-aggression-dogs.html