The answer, as with many garden plants, is to split it.
The great thing about Phormiums, as opposed to monsters like Yucca and Cordyline is that they are not one gigantic stalk or trunk: they spread by forming new plants around the old one. So it's actually quite easy to lift, split, trim and replant.
So, first job, get a fork and loosen the soil all around it. If the Phormium is in a very floppy state, you can either cut off the outside leaves, or tie the whole thing up into a bundle to make it easier to deal with.
Having loosened the soil, dig in with the fork, get underneath it, and lever it out of the ground.
At this point, you will probably see that it will start to fall apart into clumps:
If not, use a hand tool (here is my faithful Daisy Grubber, £2.50 from a cheapy shop and still going strong after two years of daily use, who says you need to buy expensive tools?) to winkle your way in amongst the roots, and prise them apart.
Shake off as much soil as you can - it's much easier to replant them if you can spread out the roots, and to do that, you need to be able to see them.
For ease of replanting, I take each clump at a time, and trim off the outside leaves as low as I can get them.
These new plants are rather two-dimensional, like a fan of Iris leaves, which makes it easy to see what you are doing.
After trimming off the outside leaves, I then cut down the remainder of the leaves to about ankle high - if you don't do this, the plants will fall over when you try to replant them.
As you can see, they now become a number of neat clumps, which can establish themselves quickly.
And then I replanted one of the best sections of the original plant, spreading the roots out sideways as much as possible, and firming it down well.
Add a good watering, and off it goes!