I would do everything possible to avoid a knife fight. Most times, I would do anything possible to avoid a fight in general. Even if that means backing down like a p*ss.
Short Story:
My friends and I jumped a guy with a knife(who just stabbed my friend) and luckily did not get stabbed. Looking back I would not have done the same thing.
Long Story:
One of my buddies was stabbed at a party in high school. The kid that stabbed him was strung out on something, not sure what but had some crazy paranoid episode. It was outside and dark. My buddy was in the front of the house, me and my other buddies were the back. I hear people start saying "Jay got stabbed'. Me and my other buddy run to the front of the house, it's pitch dark, people point us in the general direction of the stabber. We start yelling at him and clipping towards him. He is not saying much. As soon as we get close enough I punch the guy in the face and my other buddy starts in on him too. It was super dark and we were apparently close to a boat on a trailer, we are tangled up and all trip over the trailer hitch, both of us landing on the kid. We continue to punch him and soccer kick him then all of a sudden mom of the guy who was hosting the party is trying to jump on top of the kid getting his ass kicked. I guess she saw the knife and was trying to control it. She makes the horrible mistake of grabbing the blade. Her hand are getting cut and she is taking some of the blows from the bystanders trying to screw up this kid for stabbing our friend. The kid who hosted the party is yelling "Stop, you're hitting my mom!" It was truly crazy. It finally gets broken up, the mom is bleeding, the kid is fucked up bleeding from the face, my buddy that was stabbed is holding his gut. The EMT, and cops show up. The stabber was taken away. I got in shit from the cops for spitting on the kid as they took him away, but nothing came of the beating that we gave the stabber. Basically, I was young and dumb (and drunk). Looking back I would have handled the situation much differently.